THE JAPAN TIMES: Recession looms over Japan
After annualised 3.4% GDP contraction in the previous quarter, a decline of more than 20% is forecast for April
Japan’s economy is set for a deepening recession under the weight of the Covid-19 pandemic. After the annualised 3.4% GDP contraction in the last quarter, the April-June period is forecast to experience a 20%-plus decline — the worst in postwar history — as the full impact of the curb on social and economic activities to contain coronavirus infections sinks in.
The state of emergency declared in early April has since been lifted for much of the country except the greater Tokyo area and Hokkaido, as new infections have dropped to low numbers. Still, the resumption of economic activity is expected to remain slow as concern lingers over second-wave outbreaks and people are urged over the long term to adopt “new lifestyles” designed to avoid human-to-human contact. There are views that it will take a few years before economic activity returns to pre-pandemic levels.
With the economic downturn likely to be protracted, the key to a subsequent recovery is preventing mass unemployment and bankruptcies, ominous signs of which are already emerging. When the pandemic is finally over, large-scale unemployment will weigh down consumer spending, and business failures will exacerbate job losses and hamper a quick recovery.
Unlike the US, where the lockdowns amid the pandemic resulted in the loss of more than 20-million jobs in April alone and pushed the unemployment rate up to nearly 15% — the worst since the Great Depression of the 1930s — Japan has yet to see a spike in job losses. Still, the pandemic’s damage to jobs is expected to be worse than in the 2008-2009 global financial crisis, with experts and think-tanks forecasting that more than 1-million jobs could be lost this year.
The damage from the pandemic is being felt across a wide range of sectors. With cross-border travel having ground to a halt, inbound tourism to Japan — one of the few rapidly growing sectors in recent years — declined by 99.9% year on year in April, after a 93% fall in March. Retail and other service sectors that had increasingly relied on robust consumption by inbound tourists have seen their sales sharply cut. /Tokyo, May 21
© The Japan Times