Japan’s economy shrinks at record rate due to pandemic

Japan’s economy shrinks at record rate due to pandemic
Japan Economy

Japan’s economy shrank at annual rate of 27.8% in the April-June quarter, the worst contraction on record, as the coronavirus pandemic impacted on consumption and trade, according to government data released on Monday.

The Cabinet Office reported Japan’s preliminary seasonally adjusted real gross domestic product (GDP) fell 7.8% quarter on quarter.

The annual rate shows what the number would have been if continued for a year.

27.8% Rate at which the Japanese economy contracted in the April-June quarter

Japanese media reported the latest drop was the worst since World War II. But the Cabinet Office said comparable records began in 1980. The previous worst contraction came during the global financial crisis of 2008-2009.

The world’s third largest economy was already ailing when the virus outbreak struck late last year. The fall-out has since gradually worsened both in Covid-19 cases and social distancing restrictions.

The economy shrank 0.6% in the January-March period, and contracted 1.8% in the October-November period last year, meaning that Japan slipped into recession in the first quarter of this year. Recession is generally defined as two consecutive quarters of contraction.

A department store employee dresses a mannequin in Tokyo. Japan is hoping the major factors of its economy, including retail sales, soon begin to recover from the coronavirus pandemic (Jae C. Hong/AP)

Japanese economic growth was flat in July-September. Growth was modest in the quarter before that.

For the April-June period, Japan’s exports dropped at a whopping annual rate of 56%, while private consumption dipped at an annual rate of nearly 29%.

That was without any full shutdown of businesses to contain coronavirus outbreaks, which have worsened in the past month, pushing the total number of confirmed cases to over 56,000.

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