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Japan Reports Worst GDP on Record

August 17, 2020

GDP

Japan has just reported its worst GDP on record as the ongoing Covid-19 outbreak massively reduced consumption. The Japanese Cabinet Office said on Monday that their economy, the world’s third-largest, shrank by 7.8% in the second quarter compared with the previous quarter. This translated to an annual rate of decline of 27.8%, the worst since modern records started in 1980 and the third consecutive quarter of contraction.

Consumption, which accounts for more than half of Japan’s economy, fell by 8.2% for the quarter as businesses across the country shuttered during a six-week national emergency in April and May. External demand shaved three percentage points off GDP on the quarter as global trade dried up.

Noriko Hama, a professor at Doshisha Business School (at Doshisha University) said:

“The lack of a coherent policy response is really frightening. We need a wise, cautious, and broad response to this terrible situation. It is exactly what [Prime Minister] Abe and Company lack when it comes to the way they are going about things”.

The Japanese government went ahead with a subsidised plan to boost domestic travel in mid-July, just as new virus cases started to surge.

Japan has recorded more than 19,000 new virus cases in August alone, which is about a third of the total number of infections Japan has recorded during the entire pandemic.

Many economists warn that numerous relief measures adopted in two economic stimulus packages earlier this year will expire in September, posing a risk to the small and medium-sized businesses make up a large proportion of Japan’s economy.

On Monday, the Japanese Ministry of Health, Labor and Welfare announced that there have been 55,426 confirmed coronavirus cases and 1,101 Covid-related deaths.