Japan is in a recession

Le Japon est entré en récession

TOKYO | The japanese economy is in a recession, with a second quarter of contraction in a row of gross domestic product between January and march, as the crisis of the coronavirus began to strike, according to data published Monday by the government.

The GDP fell 0.9% in the first quarter of 2020 compared to the fourth quarter of 2019, where he was already contracted by 1.9% (against 1.8% like-announced on a previous estimate at the beginning of march).

The consensus of economists surveyed by Bloomberg expected a decline slightly greater in the first quarter (by 1.1%).

This is the first time since 2015 as Japan returns to recession, defined by a contraction of the national wealth, on at least two quarters.

Its economy was already in bad shape since the fourth quarter of 2019, due to an increase of two points of VAT from 1 October, which took its toll on the household consumption, and the devastating passage of powerful typhoon.

The activity continued to decrease in the first quarter under the effect of the crisis of the coronavirus, which has weakened household consumption (-0,8% on a quarter) and reduced business investment.

The growth of public investment has also experienced a halt in the first quarter (-0,4%), while foreign trade was also in bern, with a contraction of 6% of exports, partly offset by a sharp decline in imports also (-4,9%).

“The worst is yet to come”, had commented Naoya Oshikubo, economist at SuMi Trust, in a note before the release of Monday. It expects a dip of 10.2% of GDP in the second quarter compared to the first.

Because the japanese government has declared a state of emergency in early April in the face of increasing cases of COVID-19 in the archipelago, while the pandemic numbed her even more Europe and the United States.

The state of emergency in Japan did not induce containment mandatory, but allows the governors of the regions to encourage the inhabitants to stay in their homes as possible, and to businesses considered non-core to lower temporarily the curtain.

The device was lifted on Thursday, with two weeks in advance, in 39 of the 47 prefectures of the country, following a sharp decline in newly identified cases of COVID-19. But it is maintained for the moment in Tokyo and in the other regions the most urbanized and industrialized of the country.

To mitigate the impact on businesses and households, the government has drawn a plan of assistance record of 117 000 billion yens (over 1 537 billion dollars), including a lump-sum payment of 100 000 yen (more than 1 314 $) per capita to support consumption.

The government now plans to further enhance this support plan. The Bank of Japan (BoJ), it has significantly boosted its asset purchases, from march, to stabilize the financial system and to ensure that the mechanism of the credit did not derail.

In annualized terms, GDP in japan fell 3.4 % in the first quarter. In mid-April, the monetary Fund (IMF) has predicted a fall of 5.2 % of japanese GDP over the whole year, assuming a recovery of the economy from the second half.

For its part, the BoJ expects a contraction of 3 % to 5% of the japanese GDP on the year 2020/21, which started on 1 April.

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