Japan officially declined because of Covid-19

The Japanese economy has officially fallen into recession for the first time since 2015. It is also the first economic power in the world to decline due to Covid-19. According to official data, the Japanese economy has declined for the second quarter in a row, thereby theoretically being considered to officially fall into recession.

Specifically, Japan’s GDP in the first quarter of 2020 decreased by 3.4% compared to the same period last year, while this figure was down by 7.3% for the fourth quarter of 2019. The last time Japan fell into the current “technical” recession was in the second half of 2015.

“It is almost certain that the Japanese economy will decline more sharply in the second quarter and we are in a full recession,” said Yuichi Kodama, chief economist of the Meiji Yasuda Research Institute.

The Covid-19 pandemic, which began in China, has spread globally, killing more than 310,000 people as well as disrupting supply chains around the world, thereby affecting production and business activities. Currently, many countries are trying to launch bailout packages to boost the economy when consumers limit spending and enterprises have production disruptions.

Returning to the Japanese story, personal consumption, which accounts for more than 50% of the country’s US $ 5 trillion economy, declined by 0.7% in the first quarter of 2020. The main cause besides the impact of Covid-19 epidemic is the increase in consumption tax from 8% to 10% in October 2019.

Japanese exports also dropped by 6% in the first quarter due to the impact of the quarantine orders. Particularly, Japan’s exports in March witnessed the sharpest decline in nearly 4 years as shipments to the US were temporarily suspended due to the epidemic.

Worse, the fact that Japan has not completely stopped the disease has forced Prime Minister Shinzo Abe to declare a state of emergency when many new infections were discovered after days of seemingly controlling the situation.

With the declaration of an emergency, Japanese people still have to stay home and many business activities will remain closed for some time to come.

According to Reuters, the Japanese economy is forecast to decline by 22% in the second quarter of 2020 compared to the same period last year, a record since the record of this economy was recorded.

Areas dependent on the (pink) manufacturing industry in Japan will suffer longer term losses due to the Covid-19 epidemic

The Tokyo government has launched a massive bailout package of 1.1 trillion USD, equivalent to 20% of GDP to boost the economy while the Central Bank of Japan (BoJ) extended its stimulus policies to the second month. consecutive. Prime Minister Abe announced that he would launch a second bailout package in late May 2020 to create a big push for the market.

Recently, Toyota Motor has announced to reduce production to 122,000 units due to low demand as a result of the Covid-19 epidemic. Toyota’s business profit this fiscal year is expected to fall 80% to its lowest level in the past 9 years.

Meanwhile, the disease has not been controlled, causing the tourism and service industries of Japan to be seriously affected.