Coronavirus Impact: World’s third biggest economy officially enters into recession
Japan’s economy sank into a recession last quarter amid coronavirus pandemic outbreak.
- Japan slips into recession
- Analysts project a record-breaking 22% GDP contraction for the quarter through June
- GDP shrank an annualized 3.4 percent in the January-March quarter
Tokyo: Japan dived into its first recession since 2015, according to official data Monday, with the world’s third-largest economy shrank at an annual pace of 3.4% in the first three months of 2020 as it wrestles with the fallout from the coronavirus.
A recession is defined as two consecutive quarters of negative GDP growth and some analysts predicted the Japanese economy would suffer worse as the effects of the coronavirus become clear.
The 3.4% fall in gross domestic product (GDP) for the first three months of 2020, follows a 6.4% decline during the last quarter of 2019, pushing Japan into a technical recession.
While economists predict Japan’s economy will shrink at an annual pace of 22% in the April-to-June period, they also predict that the US could contract by more than 25%. The 3.4% annual rate of decline in the first quarter also compares favorably to the 4.8% the US suffered in the first three months of this year.
Meanwhile, Japan has been mildly affected by the coronavirus compared to the rest of the world, with more than 16,000 confirmed infections, including over 700 deaths. But Prime Minister Shinzo Abe imposed a state of emergency for Tokyo and six other prefectures last month out of fear the outbreak would overwhelm Japan’s healthcare system, then briefly expanded it for the entire country.
The government has announced a $990-billion stimulus bill to blunt the economic downturn caused by the pandemic, including $55 billion in direct payments to households and small businesses.
Globally, Many countries are slipping in recession due to coronavirus outbreak and the lockdown imposed by the government to prevent the spread. Recently, Germany slipped into recession as more major economies face the impact of sustained lockdowns.
Meanwhile, US may witness worst economy decline — the world’s biggest, since the Great Depression of the 1930s. According to the Goldman Sachs report, India will experience its deepest recession ever after a poor run of data underscored the damaging economic impact of lockdowns in the world’s second-most populous nation.