After a hot yet short struggle, Japan's economy has fallen prey to the coronavirus pandemic. In the last quarter of 2020, the world's third-largest economy slipped into recession for the first time in 4.5 years.
Economists note that this is the deepest postwar slump as the country is unable to cope with the fallout from the coronavirus. On Monday, May 18, Japan unveiled a disappointing report on its first quarter GDP. The final figure underlined the broadening impact of the outbreak on the economy.
"It's near certainty the economy suffered an even deeper decline in the current quarter. Japan has entered a full-blown recession," analysts at the Meiji Yasuda Research Institute said. Experts believe that the reason for the economic downturn is a drop in consumer spending as the coronavirus has ravaged the domestic economy.
In the first quarter of 2020, Japan's economy contracted by 3.4% year-on-year. At the same time, exports sank by 6%, logging its steepest decline since March 2011. Earlier, in the period from October to December 2019, a drastic fall in the economy by 7.3% was recorded. Economists define a recession as two consecutive quarters of the economic contraction. The last time a recession occurred in the country at the end of 2015.
What is more, private consumption, which accounts for more than 50% of Japan's economy, slipped by 0.7%. At the same time, analysts expected a 1.6% decline in consumption.
According to preliminary estimates, the Japanese economy will shrink by a record 22% year-on-year in the current quarter.