Japan’s Economy Slips Amid Covid-19 Restricts Consumption
Japan’s economy contracted in the first quarter of this year as a resurgence in Covid-19 infections and second state of emergency undercut consumer spending, reports said.
The Cabinet Office said GDP shrank an annualised 5.1 per cent in January-to-March from the previous quarter in real terms. However, the data were not as bad as the record drop of minus 28.6 per cent in the April to June period last year.
Japan is the world’s third-largest economy. Consumer spending accounts for more than half.
The latest figure was minus 1.4 per cent due to slow turnover at restaurants and hotels, said NHK. On the bright side, exports were up 2.3 per cent, staying positive for the third straight quarter.
But growth was slow as the auto industry struggled with a global shortage of semiconductors.
For the full fiscal year through March, GDP shrank 4.6 per cent in real terms, down for the second straight year. It was the biggest drop since comparable data first became available in fiscal 1995.
NHK said the government predicts that GDP will grow by about 4 per cent in real terms in the current fiscal year that started last month.
Economic Revitalisation Minister Nishimura Yasutoshi said the government intentionally put the brakes on the economy to deal with the Covid-19 pandemic.
“We have no plan so far to change the government’s economic outlook. We aim to get the economy back to the pre-pandemic level in the current fiscal year by implementing sound policies in a flexible manner.”
But many analysts are not so sure. NHK said the third state of emergency now in place is already taking its toll on the economy.