Japan's economy shrinks 28% in 2Q, worse than 1st estimate

Japan's ecomy shrank at a record, even worse rate in April-June quarter than initially estimated. Cabinet Office said on Tuesday Japan's seasonally justed real gross domestic product contracted at an annualised rate of 28.1 per cent, worse than 27.8 per cent figure given last month. coronavirus pandemic, which has people staying home, restaurants and stores empty or closing, and travel and tourism se-diving, has hurt all world's ecomies and many companies. But it has slammed Japan's export-reliant ecomy.

Restoring growth will be a priority as country prepares to choose a new leer to replace Prime Minister Shinzo Abe, who is resigning for health reasons. A vote among governing party members is expected next week. Or data released Tuesday showed cash earnings improving somewhat, and consumer spending and or business activity is expected to rebound following sharp drops as country sought to bring coronavirus pandemic under control.

"However, high-frequency data show that growth is struggling to gain pace, suggesting a very grual and protracted recovery after initial bounce. near-term outlook, refore, remains challenging," Oxford Ecomics said in a commentary.

Quarter-on-quarter, ecomy contracted 7.9%, according to revised figures, down from 7.8 per cent in preliminary data. annual rate shows what number would have been if continued for a year. Cabinet Office said government began keeping comparable records in 1980. previous worst contraction, a 17.8 per cent drop, was in first quarter of 2009 during global financial crisis.

But anecdotally latest drop is considered worst since World War II. Japan h alrey slipped into recession in first quarter of this year, contracting by an annualised 2.3 per cent. It shrank 7.0 per cent in final quarter of last year. Recession is generally defined as two consecutive quarters of contraction. Growth was flat in July-September of last year.

Domestic demand contracted even worse in this year's second quarter, as private investment fell. Public demand, driven by government spending, also fared worse than thought earlier. Abe has centred his "Abemics" policies around keeping ecomy going through super-easy lending and deregulation. approach relied mostly on monetary easing by central bank and helped to end years of deflation. But it never attained sustained growth rates Abe h targeted. All of candidates to replace him are expected to keep most of those policies in place. 

(Im Credits: AP)