Japan slips into recession, worst yet to come as pandemic wreaks havoc

[webfact]

Japan slips into recession, worst yet to come as pandemic wreaks havoc

By Leika Kihara and Tetsushi Kajimoto

 

FILE PHOTO: A woman wearing a protective face mask, following an outbreak of the coronavirus disease (COVID-19), walks in front of a temporary closed ramen noodle restaurant in Tokyo, Japan April 8, 2020. REUTERS/Issei Kato

 

TOKYO (Reuters) - Japan's economy slipped into recession for the first time in 4-1/2 years, GDP data showed on Monday, putting the nation on course for its deepest postwar slump as the coronavirus crisis takes a heavy toll on businesses and consumers.

 

The world's third-largest economy shrank for the second consecutive quarter in the three months to March, intensifying the challenge for policymakers battling a once-in-a-century pandemic that has already caused widespread disruptions.

 

Gross domestic product (GDP) contracted an annualised 3.4% in the first quarter as private consumption, capital expenditure and exports fell, preliminary official data showed, following a revised 7.3 decline in the October-December period, meeting the technical definition of a recession.

The median market forecast was for a 4.6% contraction in the first quarter.

 

The last time Japan suffered recession was in the second half of 2015.

 

"It's near certainty the economy suffered an even deeper decline in the current quarter," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute. "Japan has entered a full-blow recession."

 

The coronavirus, which first emerged in China late last year, has ravaged the global economy as many nations went into strict lockdowns to curb the outbreak that has so far killed over 310,000 people worldwide. The pandemic has been massively disruptive on supply chains and businesses, particularly in trade-reliant nations such as Japan.

 

Private consumption, which accounts for more than half of Japan's $5 trillion (£4.13 trillion) economy, slipped 0.7%, versus a 1.6% drop expected by economists.

 

That marked the second straight quarter of decline, as households were hit by the double-whammy of the coronavirus and a sales tax hike to 10% from 8% in October last year.

 

The virus' impact on corporate Japan has been telling, with the GDP data showing exports contracted sharply by 6% in the first quarter.

 

The shakout in global trade was highlighted in the recent March data, with Japan's exports slumping the most in nearly four years due to plunging U.S.-bound shipments including cars.

 

Capital expenditure fell 0.5% in the fourth quarter, against a median forecast for a 1.5% drop and marked the second consecutive quarter of declines, the data showed.

 

Taken together, domestic demand knocked 0.7 percentage point off GDP growth, while external demand shed 0.2 point.

All of this has put a strain on labour market. The jobless rate in March rose to its highest in a year, while job availability slipped to a more than three-year low.

 

DEEPENING SLUMP

Conditions are expected to have worsened in Japan in the current quarter after Prime Minister Shinzo Abe in April declared a nationwide state of emergency amid a rise in coronavirus infections.

 

The emergency, which urged citizens to stay home and many businesses to close, was lifted for most regions on Thursday, but remained in effect for some big cities including Tokyo.

 

Analysts polled by Reuters expect Japan's economy to shrink an annualised 22.0% in the current quarter, which would be the biggest decline on record and underscores the collapse in activity that is expected to see the worst global slump since the Great Depression of the 1930s.

 

The government has already announced a record $1.1 trillion stimulus package, and the Bank of Japan expanded stimulus for the second straight month in April. Abe has pledged a second supplementary budget later this month to fund fresh spending measures to cushion the economic blow from the outbreak.

 

The nation's major globe-trotting manufacturers weren't spared the pandemic's sweeping impact either.

 

Toyota Motor Corp <7203.T> on Friday said it would reduce vehicle production in Japan by 122,000 units in June, as a lack of demand for new cars due to the coronavirus prompts the automaker to keep its plants running on limited operations. The automaker is bracing for an 80% drop in full-year operating profit, its lowest in nine years.

 

(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Shri Navaratnam)

 

-- © Copyright Reuters 2020-05-18

 

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[thaibeachlovers]

41 minutes ago, webfact said:

The last time Japan suffered recession was in the second half of 2015.

That's hardly long ago.

 

Poor Japanese government. The women won't get married and breed, the farmers are disappearing, they can't use nuclear for electricity production- can it get worse?

 

[Canuck1966]

1 hour ago, thaibeachlovers said:

That's hardly long ago.

 

Poor Japanese government. The women won't get married and breed, the farmers are disappearing, they can't use nuclear for electricity production- can it get worse?

 

Yeh a strawberry can cost 350 quid

That's British pounds, not a typo!!

[Canuck1966]

 

[Dap]

4 hours ago, thaibeachlovers said:

That's hardly long ago.

 

Poor Japanese government. The women won't get married and breed, the farmers are disappearing, they can't use nuclear for electricity production- can it get worse?

 

Could be their sushi takes a major hit from dying oceans ?

[Krataiboy]

More media hysteria. A total of 753 deaths from COVID 19 out of a population of over 126,500,000 is hardly "wreaking havoc". 

[phantomfiddler]

6 hours ago, Canuck1966 said:

Yeh a strawberry can cost 350 quid

That's British pounds, not a typo!!

Or a million dollars for one tuna ????

[phantomfiddler]

59 minutes ago, Krataiboy said:

More media hysteria. A total of 753 deaths from COVID 19 out of a population of over 126,500,000 is hardly "wreaking havoc". 

Totally agree, it,s not the supposed pandemic that is doing the damage, it is the massively overblown reaction to it that is causing the serious catastrophe ????

[khunken]

This is not totally COVID related. Look at the October-December quarter figures - minus 7.3%. January-Match -3.4%.

 

Most of the blame is on an incompetent government, which jacked up the VAT rate last year from 8-10% in a country that badly needs consumption to move away from less than 1% growth for quite a while. It's also an ageing country that refuses to allow any significant immigration to provide a balance between workers contributing to the economy and retirees that do the opposite. Robots have their place but they don't contribute to the exchequer.

[Eric Loh]

27 minutes ago, phantomfiddler said:

Totally agree, it,s not the supposed pandemic that is doing the damage, it is the massively overblown reaction to it that is causing the serious catastrophe ????

Not what you think but what the Japanese people feel and they are losing patience and angry with Shinzo Abe for thinking like Trump and prioritizing the economy over the well-being of the Japanese public. 

[Tropposurfer]

The third largest economy in the world, and one of the smallest nations (geographically) and on a par population wise with many, many others.

Rose from the ashes of horrific militarist madmen and a world war (which these mad miliarists started) to this position without waring against anyone again. Unlike the USA.

Amazing !

[Cryingdick]

11 hours ago, thaibeachlovers said:

That's hardly long ago.

 

Poor Japanese government. The women won't get married and breed, the farmers are disappearing, they can't use nuclear for electricity production- can it get worse?

 

 

The guys in Japan are also not interested in women and dating anymore. They call them something like herbivore men. They would rather buy video games and live in an Internet cafe than date. Men in particular are choosing the solo life. 

 

Japan has had economic problems off and on for decades now this is nothing new for them. They always end up on their feet in the end. I doubt it is any worse than what is going to be reported other places. Thailand will likely have increased its tourism revenues by 1,000% year on year as usual.

[timendres]

9 hours ago, Eric Loh said:

Not what you think but what the Japanese people feel and they are losing patience and angry with Shinzo Abe for thinking like Trump and prioritizing the economy over the well-being of the Japanese public. 

Not according to the Japanese people I speak with.

[torturedsole]

9 hours ago, khunken said:

It's also an ageing country that refuses to allow any significant immigration to provide a balance between workers contributing to the economy and retirees that do the opposite. Robots have their place but they don't contribute to the exchequer.

Good post, but the UK should have adopted the Japanese immigration model years ago.  Too late now.    

[nattaya09]

10 hours ago, Eric Loh said:

Not what you think but what the Japanese people feel and they are losing patience and angry with Shinzo Abe for thinking like Trump and prioritizing the economy over the well-being of the Japanese public. 

 

 

We almost got through ten posts without Trump's name being shoehorned into a thread about Japan. Thanks!

[tribalfusion001]

7 hours ago, Cryingdick said:

 

The guys in Japan are also not interested in women and dating anymore. They call them something like herbivore men.

How strange, Japanese girls look quite fit, well, not all of them.

[thaibeachlovers]

12 hours ago, phantomfiddler said:

Totally agree, it,s not the supposed pandemic that is doing the damage, it is the massively overblown reaction to it that is causing the serious catastrophe ????

Seems to me that more and more people are waking up to the reality. This crisis was, IMO, blown up by the media and seized on by politicians.

Time will tell if Sweden had the right idea.

[thaibeachlovers]

43 minutes ago, tribalfusion001 said:

How strange, Japanese girls look quite fit, well, not all of them.

Have you been looking at "idols" on the internet? Yes some are DDG but like in LOS not all.

[thaibeachlovers]

11 hours ago, Tropposurfer said:

The third largest economy in the world, and one of the smallest nations (geographically) and on a par population wise with many, many others.

Rose from the ashes of horrific militarist madmen and a world war (which these mad miliarists started) to this position without waring against anyone again. Unlike the USA.

Amazing !

They had a compliant population because of their culture, and were prepared to sacrifice as individuals for the future.

I can't see the spoiled little princes and princesses in the west being prepared to sacrifice anything for future generations. We have bred the me generation.

[thaibeachlovers]

8 hours ago, Cryingdick said:

 

The guys in Japan are also not interested in women and dating anymore. They call them something like herbivore men. They would rather buy video games and live in an Internet cafe than date. Men in particular are choosing the solo life. 

 

Japan has had economic problems off and on for decades now this is nothing new for them. They always end up on their feet in the end. I doubt it is any worse than what is going to be reported other places. Thailand will likely have increased its tourism revenues by 1,000% year on year as usual.

I think Japanese men are still interested in women, but women are not interested in men. From what I've read, Japanese women prefer career over being a domestic slave, and can we blame them?

[car720]

21 hours ago, webfact said:

Toyota Motor Corp <7203.T> on Friday said it would reduce vehicle production in Japan by 122,000 units in June, as a lack of demand for new cars due to the coronavirus prompts the automaker to keep its plants running on limited operations. The automaker is bracing for an 80% drop in full-year operating profit, its lowest in nine years.

Well it seems the virus may also take care of a lot of the climate i.e. pollution problems as well as the human problem.

[car720]

24 minutes ago, thaibeachlovers said:

The guys in Japan are also not interested in women and dating anymore. They call them something like herbivore men. They would rather buy video games and live in an Internet cafe than date. Men in particular are choosing the solo life. 

They are called millenials. 

[baansgr]

2 hours ago, nattaya09 said:

 

 

We almost got through ten posts without Trump's name being shoehorned into a thread about Japan. Thanks!

Thanks to Trump....everything a few months ago used to be Brexit....Thai exports down...blame Brexit, coral dying...blame Brexit...Mr T can have the highlight for a while.