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Japan suffers record slump as pandemic hits consumers and exporters

Written by on 17/08/2020

Japan suffered its biggest slump on record in the second quarter as the economy shrank by 7.8% thanks to the impact of the coronavirus crisis.

It came after lockdown measures kept shoppers at home while a global squeeze in demand hurt big exporters such as Nissan and Mazda.

The contraction represented the third quarter in a row of decline, prolonging the recession in the world’s third largest economy – which was already struggling before the pandemic struck.

Containers are seen at the international cargo terminal at the port in Tokyo on August 17, 2020
Image: Japanese exporters have been hurt by falling global demand

But the April-June performance was milder than that suffered by other members of the G7 group of advanced economies during the period.

Britain saw the biggest downturn, with GDP shrinking by 20.4% according to official figures published last week.

Japan’s latest data revealed that its economy has shrunk to the smallest size since 2011, when it was still suffering from two decades of stagnation.

It means all the gains enjoyed since then, largely attributed to prime minister Shinzo Abe’s so-called “Abenomics” stimulus policy, have now been wiped out.

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The scale of the second quarter decline surpasses the slump seen in 2009 during the global financial crisis.

Economy minister Yasutoshi Nishimura admitted that the GDP figures were “pretty severe” but pointed to signs of improvement such as a recent pick-up in consumption.

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Japan lifted emergency measures to combat the pandemic in late May, allowing the economy to reopen, and has deployed a big new wave of stimulus to cushion it from the impact of the pandemic.

But a recent rise in infections has darkened the outlook, while US-China trade tensions add to global uncertainties weighing on it.

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Takeshi Minami, chief economist at Norinchukin Research Institute, said of the latest figures: “The big decline can be explained by the decrease in consumption and exports.

“I expect growth to turn positive in the July-September quarter.

“But globally, the rebound is sluggish everywhere except for China.”

 Sky News

© Sky News 2020

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