Bloomberg
Published Aug 16, 2020 08:48PM ET
Updated Aug 16, 2020 09:27PM ET
Japan’s Economy Takes Record Hit With Virus Clouding Outlook
(Bloomberg) -- Japan’s economy suffered a record contraction last quarter as a state of emergency and lockdowns in the country’s major export markets hammered consumer spending, production and exports. A recent uptick in infections threatens to slow the recovery.
Gross domestic product contracted an annualized 27.8% in the three months through June from the previous quarter, the Cabinet Office reported Monday, the worst for data back to 1955. Analysts had forecast a 26.9% decline. Until the pandemic, the economy’s worst single quarter was during the global financial crisis, when GDP shrank about 18%.
The figures showed a sharp drop in private consumption was the biggest drag on the economy as the virus-triggered emergency kept shoppers at home. Some factory production lines were also idled as lockdowns in the country’s major export markets contributed to the slide.
The question for policy makers and economists now is how quickly the economy can recover from the body blow and whether activity will need to be restricted again after a rise in virus cases.
Key Insights
What Bloomberg’s Economist Says
“Beyond 2Q, high-frequency indicators suggest the economy has been recovering in 3Q. Even so, the virus outbreak in Japan has taken a turn for the worse, prompting the government to reintroduce containment measures. This risks thwarting the recovery.”
--The Asia Economist Team
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(Adds more details, economist comment.)
©2020 Bloomberg L.P.
Written By: Bloomberg
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