Japan’s economy shrinks at annual rate of 27.8%, worst contraction on record

In April-June, Japan recorded worst contraction of all times as ecomy shrank by 27.8 per cent at an annual rate, as per government data released on August 17. ecomy of Japan is hard hit by coronavirus pandemic with declining tre and consumption cycle. However, investors in Asia looked ahe to central bank meetings this week in China, Indonesia and Philippines, with few or market-moving events in sight.

Coronavirus takes a toll on Japan's ecomy

Reports suggest that Nikkei 225 in Tokyo fell 0.6% to 23,145.28 after data showed world’s third-largest ecomy shrank. Cabinet Office reported that Japan’s gross domestic product which is sum of a nation’s goods and services, fell 7.8% quarter on quarter. According to reports, latest drop is being considered worst since World War II. previous worst contraction was in year 2009 with a drop of 17.8 per cent. 

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Stefan Angrick of Oxford Ecomics told AP, “ ro ahe looks choppy as a resurgence in Covid cases will weigh on domestic and overseas spending”. Minister of Ecomic and Fiscal Policy, Yasutoshi Nishimura said, “In April, May, a state of emergency was issued, it was a situation where ecomy was artificially stopped so to speak, and impact was severe”. He ded, “se are tough numbers but y bottomed out in April and May, we would like to put all our efforts into returning to a growth trajectory”. 

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According to reports, last year, ecomy shrank 0.6% in January-March period, and contracted 1.8% in October-December period. Ecomists say consumer spending could be under more pressure after government aid including ditional $600 weekly unemployment benefits expired. Investors are counting on Washington for ar ecomic lifeline, but legislators are far apart on a possible pack. According to analysts, ecomy will grually recover once impact of pandemic is curbed. Japan is highly dependent on China for export. Even though China is battling virus, demand still remains questionable. However, re are companies such as Nintendo co who have seen a boom in profits. 

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(Im Credits: AP)