Japanese economy in recession, growth rate lowest since 2015

The economy will take about 2 years to recover.

Japan has slipped into recession for the first time after 2015 with a growth rate of 3.4 percent. Japan is the world’s second largest developed economy. First quarter GDP indicated exports falling to a new level due to decrease in demand as the world grapples with the virus. The pandemic has caused many countries to follow strict lockdown which has disrupted supply chains. Japan is a trade reliant nation with its exports falling to countries such as the US and China. Tokyo Olympics which were going to held in 2020 have been postponed which has also decreased the level of economic activity in Japan.

Japan’s economy also relied on the tourism industry and with the pandemic going on, countries have stopped movement of people to and from abroad. Private consumption, which accounts for more than half of the $5 trillion economy, has slipped about 0.7 percent. The unemployment rate in Japan edged up to 2.5 percent in March 2020, the highest in a year.

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The Abe led government has announced a $1.1 trillion package and has also pledged a secondary budget to fund spending measures to cushion the economic blow. However analysts warned that the implementation would not be quick enough. ‘’As always in Japan, the implementation is very slow. It will take the later half of the second quarter (and) the third quarter” for government stimulus to kick in, said Martin Schulz, chief economist at Fujitsu.

Economists predict that the recovery will take about two years.

Japan has slipped into recession for the first time after 2015 with a growth rate of 3.4 percent. Japan is the world’s second largest developed economy. First quarter GDP indicated exports falling to a new level due to decrease in demand as the world grapples with the virus. The pandemic has caused many countries to follow strict lockdown which has disrupted supply chains. Japan is a trade reliant nation with its exports falling to countries such as the US and China. Tokyo Olympics which were going to held in 2020 have been postponed which has also decreased the level of economic activity in Japan.

Japan’s economy also relied on the tourism industry and with the pandemic going on, countries have stopped movement of people to and from abroad. Private consumption, which accounts for more than half of the $5 trillion economy, has slipped about 0.7 percent. The unemployment rate in Japan edged up to 2.5 percent in March 2020, the highest in a year.

The Abe led government has announced a $1.1 trillion package and has also pledged a secondary budget to fund spending measures to cushion the economic blow. However, analysts warned that the implementation would not be quick enough. ‘’As always in Japan, the implementation is very slow. It will take the later half of the second quarter (and) the third quarter” for government stimulus to kick in, said Martin Schulz, chief economist at Fujitsu.

Economists predict that the recovery will take about two years.