Japan’s economy slipped into recession for the first time in more than 4 years, GDP data showed on Monday, putting the nation on course for its worst slump as the coronavirus continues to sweep through the country.
Gross domestic product shrank an annualized 3.4% in the three months through March from the previous quarter as exports slid and social distancing crimped consumer spending, Cabinet Office figures showed Monday. While the result was slightly better than an expected 4.5% drop, helped by a downgrade of the previous quarter’s contraction, economists and policy makers agree that worse is in store in the current quarter.
Two consecutive quarters of shrinking GDP confirm that the world’s third-largest economy fell into a recession even before Prime Minister Shinzo Abe’s April declaration of national emergency. Analysts see a 21.5% contraction in the three months through June, a record for official data going back to 1955.
“There’s no doubt that this quarter has gotten much worse,” said economist Takeshi Minami at Norinchukin Research Institute. “Companies are struggling to secure funding and that suggests business investment will remain weak and many workers are concerned about their wages.”
The crisis has put pressure on policy makers to step up stimulus measures that, at a record 117 trillion yen ($1.1 trillion), already total more than 20% of GDP.
“It’s near certainty the economy suffered an even deeper decline in the current quarter,” said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute. “Japan has entered a full-blow recession.”