Business & Economy

Japan’s GDP shrinks 7.8 percent in Q2

Tokyo, Aug 17 (efe-epa).- Japan’s gross domestic product (GDP) shrank by 7.8 percent between April and June compared to the previous three months, its third consecutive quarter of contraction, mainly due to the impact of the COVID-19 pandemic, the government announced Monday.

The GDP contraction during the third quarter of the year follows the 0.6 percent decline recorded between January and March, when the world’s third largest economy entered technical recession.

Compared to the second quarter of 2019, Japan’s GDP fell by 9.9 percent, according to the first estimate published by the Cabinet Office on Monday.

The quarterly decline exceeds the 4.8 percent contraction that the Japanese economy experienced in the first quarter of 2009 amid the global financial crisis triggered by the collapse of Lehman Brothers, and is the biggest recorded since 1955, a Cabinet Office official told local media.

Japan’s GDP was once again weighed down by pandemic-related economic constraints, and in particular the state of emergency that was declared throughout the country between mid-April and the end of May and which effectively resulted in the closure or reduction of activities of many businesses.

During this period, the Japanese authorities also recommended that citizens stay at home and only step outside for essential activities, which led to a sharp reduction in domestic consumption.

Household spending, which accounts for more than half of the country’s GDP, contracted by 8.2 percent between April and June compared to the previous quarter.

Exports of goods and services, another pillar of the Japanese economy, plummeted by 18.5 percent in line with the decline in global demand.

This category also includes spending by foreign visitors, which in turn has fallen to a record low due to border restrictions imposed by Japan due to the pandemic.

Corporate capital investment decreased by 1.5 percent amid uncertainty faced by Japanese companies due to the domestic and global situation. EFE-EPA


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