Japan’s GDP posts first contraction since 2009 over Covid-19
Tokyo, Feb 15 (efe-epa).- Japan’s gross domestic product (GDP) shrank by 4.8 percent year-on-year in 2020 as a result of the Covid-19 pandemic, marking its first contraction since the 5.7 percent decline it registered in 2009, the government said Monday.
During the last quarter of the year between October and December, the Japanese economy grew at a rate of 3 percent compared to the previous quarter, according to data published by the Cabinet Office.
The economy’s recovery from the first Covid-19 state of emergency declared in the country last spring to contain the spread of the virus had been more pronounced in the period between July and September, when the GDP had expanded by 5.3 percent.
The GDP in the fourth quarter of the year contracted by 1.2 percent from the same period of 2019, while in the third quarter the year-on-year slowdown was 5.8 percent.
Among the factors that contributed most to the contraction of the Japanese economy in 2020 was a reduction in exports, a significant contributor to Japan’s GDP, which decreased by 12.3 percent year-on-year.
The decline in exports was recorded amid the ongoing pandemic, which led to disruptions in production, supply chain problems and a fall in global demand that seriously impacted many export-dependent economies around the world.
Another factor that contributed to the decline in GDP was household consumption, the main pillar of the Japanese economy, which contracted year-on-year by 6.3 percent.
Domestic spending in 2020 was affected by the authorities’ recommendations for citizens to stay home as far as possible and by the cancellation of mass sporting and cultural events in the first half of the year due to the pandemic, with some restrictions on capacity and others that are still in force.
Companies’ capital investment also fell by 5.8 percent with respect to the previous year.
In contrast, public investment increased by 3.5 percent year-on-year, driven by the multi-million dollar stimulus programs the government approved to cushion the impact of the pandemic.
The Japanese economy continued to recover in the last quarter of 2020, albeit more slowly, due to an accelerated increase in Covid-19 cases since November that led to the government to declare a second state of emergency in early 2021 in the most populated regions of the country that is currently in effect.
Household spending grew by 2.2 percent quarter-on-quarter in the period between October and December but the growth was less than the 5.2 percent rise recorded in the third quarter due to the apparent impact of calls for restrictions due to the surge in infections.
Exports grew by 11.1 percent in the last three months of 2020, following a recovery of 7.4 percent in the third quarter of the year, which had followed a 17.2 percent collapse in the previous quarter.
Corporate investment also recovered in the last three months of 2020, with a quarter-on-quarter increase of 4.5 percent following a 2.4 percent decline in the third quarter.
Public investment in Japan between October and December increased by 1.3 percent over the previous quarter. EFE-EPA