Japan’s GDP posts 1.9 pct year-on-year contraction in Q1

Tokyo, May 18 (EFE).- Japan’s gross domestic product (GDP) contracted 1.9 percent between January and March compared to the same period last year due to the impact of the Covid-19 pandemic, the government said Tuesday.

The world’s third largest economy also shrank by 1.3 percent with respect to the last quarter of 2020.

Japan had ended 2020 with a 4.8 percent year-on-year drop in its GDP due to the effects of the crisis sparked by the coronavirus pandemic, according to preliminary data released by the Cabinet Office.

The main reason for the GDP’s contraction in the first quarter of 2021 is the 3.3 percent year-on-year decrease in household consumption, the main pillar of the Japanese economy, which was impacted by the new state of emergency declared in several regions of the country amid a surge in Covid-19 cases.

Domestic spending fell 1.4 percent compared to the previous quarter after posting a recovery in the third and fourth quarters of 2020 as restrictions imposed in Japan due to the pandemic were lifted.

The Japanese government declared a second state of emergency in Tokyo and other main regions of the country between the beginning of January and the end of March.

Under the state of emergency, residents were urged to work from home and avoid non-essential movement while bars and restaurants were asked not to serve alcohol and close at 8 pm.

The weak domestic consumption was partially offset by a recovery in exports, another engine of growth for the Japanese economy, which increased 1 percent year-on-year and 2.3 percent compared to the previous quarter.

Corporate capital investment declined 3.5 percent year-on-year and 1 percent quarter-on-quarter while public investment fell 1.1 percent compared to the last quarter of 2020 and rose 2.7 percent year-on-year.

The new quarterly contraction of the Japanese economy comes after it began to recover from the impact of the virus in the second half of 2020 owing to a slight improvement in domestic consumption and exports.

Analysts predict that the GDP of the current quarter will also reflect the impact of restrictions in effect since early May in Tokyo and other regions on account of the fourth wave of infections and while the vaccination campaign advances at a much slower pace than in other developed countries. EFE

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