Japan's economy fell into recession
With GDP declining for two consecutive quarters, Japan is now the world's largest economy in recession, mainly because of Covid-19.
Preliminary Japanese data released this morning showed that the country's GDP fell by 3.4% in the first quarter. Both personal consumption, capital expenditure and exports fell. Japan's GDP has gone down for 2 consecutive quarters, causing the country to fall into a technical recession for the first time in nearly 5 years. A few days ago, Germany also announced its first-quarter GDP decline, suffering the same recession as Japan.
Covid-19 is causing severe damage to businesses and consumers in the world's third largest economy. "It is almost certain that Japan's GDP will fall even further this quarter," said Yuichi Kodama, an economist at Meiji Yasuda Research Institute.
Personal consumption - which accounts for more than half of Japan's $ 5,000 billion economy - fell by 0.7% in the first quarter. double action from Covid-19 this year and the consumption tax increase from 8% to 10% last year.
Export in the first quarter decreased by 6%. Particularly in March, exports plunged the most in 4 years, mainly due to plummeting products to the US.
Capital expenditure decreased by 0.5% in the first quarter. This is also the second consecutive quarter this figure goes down.
All of these factors are putting pressure on the labor market. Japan's unemployment rate reached its highest in a year in March. The number of available jobs also bottomed out in 3 years.
The situation in Japan is expected to get worse this quarter, after Prime Minister Shinzo Abe in April declared a national emergency because of a widespread pandemic. This keeps people at home and businesses out of business. Last week, the new blockade order was lifted somewhat, but maintained in many big cities, including Tokyo.
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