JAPAN'S ECONOMY IN BIG DECLINE
Japan's economy in the April-June period shrank an annualized real 27.8 percent from the previous quarter, the sharpest contraction on record, as economic activity was restricted under a state of emergency during the novel coronavirus outbreak, government data showed Monday.
Kyodo News reported that the preliminary data on gross domestic product, the total value of goods and services produced in the country, correspond to a 7.8 percent decrease on a seasonally-adjusted quarterly basis, marking negative growth for the third consecutive quarter, according to the Cabinet Office.
Comparable data are available since the April-June quarter of 1980. But a Cabinet Office official said the latest figure is considered the largest contraction on record, even dating back to 1955, the earliest point at which the government can track reference values.
Before the emergence of the pandemic, Japan's economy was already on the back foot due to the U.S.-China trade spat and a 2 percentage point consumption tax hike last year. Damage to the economy widened during the pandemic after the central government declared a state of emergency in April.
Local governments asked residents to stay at home and nonessential businesses to suspend operations under the emergency declaration, which was first issued on April 7 for Tokyo and six other prefectures and for the entire nation later. It was lifted for all 47 prefectures by late May.
A Mitsukoshi department store in Tokyo's Nihombashi area is closed on April 8, 2020, a day after Prime Minister Shinzo Abe declared a state of emergency for Tokyo, Osaka and five other prefectures to curb the spread of the new coronavirus. (Kyodo).
Many analysts have forecast that Japan's economy will rebound by over 10 percent in the July-September period from the current quarter in real terms on an annualized basis, given the gradual resumption of economic activity after the end of the virus emergency.
Analysts believe it will take at least a few years for the economy to bounce back to its pre-pandemic level.
The latest figures, far exceeding the previous record of an annualized real 17.8 percent contraction in the January-March quarter of 2009 in the wake of the global financial crisis, was worse than the average forecast by private-sector economists of a 26.59 percent shrinkage.
Economic revitalization minister Yasutoshi Nishimura told a press conference that the "severe outcome" was due to the state of emergency, saying, "We'll get the economy back on a growth track from rock bottom in April and May, led by domestic demand."