JAPAN’S 1ST QTR GDP SHRINKS 4.8%

Japan's economy in the first quarter (January-March) is estimated to have shrunk an annualized real 4.8 percent, as a second state of emergency over the coronavirus pandemic dampened consumption, economists said Friday, Mainichi Shimbun reported.

The average estimate by 10 economists polled by Kyodo News also indicates the world's third-largest economy likely logged its first shrinkage since an annualized 29.3 percent contraction in the three months ended in June 2020, its worst economic plunge on record triggered by its first virus emergency.

The Cabinet Office is scheduled to release preliminary GDP data for Q1 this year on May 18.

With the forecasts ranging between decreases of 3.5 percent and 8.8 percent, the economists all cited the impact of the country's second state of emergency, declared in early January for the Tokyo metropolitan area and later expanded to 11 out of the nation's 47 prefectures amid a third wave of virus infections since November.

Asking for people to stay home and restaurants and bars to close early to curb the virus spread, the measure led to private consumption, which accounts for more than half of Japan's GDP, to a sharp drop.

It was fully lifted in late March. In addition, the government's "Go To Travel" subsidy program, launched last July to help the tourism industry weather the fallout from the pandemic, has been suspended since late December in response to a spike in virus cases.

"Consumption in the service sector dropped remarkably due to the virus emergency, affecting the economy," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, who forecast an annualized 4.9 percent GDP decline in the quarter ended March.

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