Japan's economy fell into recession for the first time in four and a half years, gross domestic product figures revealed late Monday, placing the country on track for its worst post-war downturn as the coronavirus disaster unleashed a crushing blow on companies and their workers.
For the second consecutive quarter in the three months leading up to March, the world's third-largest economy shrank, intensifying the challenge for policymakers fighting a deadly virus that has already caused widespread financial and emotional pain.
Japan shrank an annualized 3.4 percent from the previous quarter as exports and social distancing crimped consumer spending, official figures showed Monday, confirming the second straight quarterly contraction.
Even with a partial lifting of economic activity restrictions in recent days, other major economies are expected to join Japan in the current quarter's recession as households limit expenditure to essentials and businesses cut investment, production, and hiring to stay afloat amid the devastating virus fallout.
That makes Japan the biggest economy in the pandemic period to officially enter a recession, also described as two consecutive quarters of negative growth. Many major economies around the world are expected to follow as attempts to contain the virus prove very difficult. China's experiences, where the epidemic first emerged in December and January, indicate recovery would be long and hard.
The decline in GDP came on the heels of a 1.8 percent retreat in the fourth quarter last year as a tax increase and storms battered the country hard -- even before the coronavirus forced to close down a big segment of Japan's economy.
According to SuMi Trust senior economist Naoya Oshikubo, he expect "the worst is yet to come," with the state of emergency in place and the seriousness of the crisis among Western countries continuing to distort the Japanese economy.
The ongoing global health disaster has put so much burden on Japan's policymakers to fast-track emergency financial aid and other urgent measures that, on a ¥117 trillion record tab, is already responsible for over 20 percent of its GDP.
Economic Minister Yasutoshi Nishimura, during his Monday speech following the GDP disclosure, stated that authorities are working hard to pass a second additional stimulus package to deliver more assistance to their constituents.
The crisis has been hugely bad for the global supply chain and businesses, especially in trade-dependent economies like Japan. Private consumption, which accounts for over 50 percent of the country's $5 trillion economy, weakened 0.6 percent, against a 1.5 percent fall estimated by market observers.
