Japan: historic fall of the GDP in the 2nd quarter, modest recovery expected

Japon: chute historique du PIB au 2e trimestre, reprise modeste attendue

The japanese GDP for the second quarter collapsed by 7.8% compared to the previous quarter under the impact of the pandemic coronavirus, a diving history, marking a third straight quarter of contraction for the third largest economy in the world.

This drop of 7.8%, according to preliminary data released Monday by the government, following declines in the first quarter (0.6%) and in the fourth quarter of 2019 (-1,9%), which had marked the entry into recession of the country.

This is the first recession in Japan since 2015, set by a contraction of the national wealth, on at least two consecutive quarters.

It is also the decrease in the most brutal of the GDP in the country since comparable data have been put in place in 1980.

The consensus of economists surveyed by Bloomberg expected a decline slightly less important (-7,5%).

Japan less affected than Europe and the United States

The economy of the Archipelago, already in bad shape since the last quarter of 2019 as a result of an increase of VAT in October, has suffered the impact of the sars coronavirus from the first quarter of 2020.

In the second quarter, activity has still suffered more then that a state of emergency was put in place in the country in April and may. The consumption of households has decreased by 8.6% quarter-on-quarter, and business investment contracted by 0.2% (land) and 1.5% (non-land).

The external trade was also in bern, with a contraction of 18.5% in exports and a 0.5% decrease in imports (respectively -5,4% and-4.2% in the first quarter).

Public investment, which had declined in the first quarter, however, rising 1.2% in April-June.

With about 54 000 reported cases and one thousand deaths related to the disease Covid-19, Japan has been less affected than many countries in europe and the us, whose economies have felt.

The impact of the state of emergency nippon, calling for the voluntary cooperation of citizens and businesses and not with penalties, has also been lower than in other industrialized countries.

The euro zone as well as charged in the second quarter, a decline of 12.1% of its GDP, leaded by diving in even more significant savings French, Italian and Spanish.

Recovery is “modest”

Despite the rise in the number of new cases of daily infection since the beginning of July, the japanese government has consistently expressed its reluctance to launch new calls for the confinement, fearing their negative effect on the economy.

The decline in GDP in the second quarter is mainly attributed to the state of emergency of April and may, and the figures show an improvement from the month of June, also commented on Yoshiki Shinke, a senior economist of the research institute of Dai-ichi Life, in a note.

“The figures for July-September are expected to begin to rise, after the lifting of the national state of emergency”, had noticed to his side, Naoya Oshikubo, economist at SuMi Trust, in a note before the release of Monday. He anticipates for the third quarter, a rebound of 2.6% compared to the second.

To cushion the economic shock of the pandemic, the japanese government has implemented two stimulus packages of a magnitude historic in the spring, including a lump sum of 100,000 yen to every resident of the country. This premium should promote the consumption during the summer, said Naoya Oshikubo.

But while the number of new cases daily of coronavirus remains high, the recovery will be “modest”. “We believe that we will have to wait until 2022 for that GDP returns to its level prior to the sars coronavirus, says the analyst.

The restart of the economy is also expected to be hindered by a diminished demand, which affects japanese exports in the countries hardest hit by the pandemic.

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