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In more news from Japan, the country’s economy contracted 1.3% in the three months to March after the government reimposed coronavirus restrictions in major cities as infections surged, data showed Tuesday.
The quarter-on-quarter fall came after the world’s third-largest economy grew for two quarters to December, but the expansion was stopped in its tracks by a winter increase in coronavirus cases.
The government imposed new virus states of emergency in January in response, urging people to stay at home and calling for restaurants to close earlier.
The contraction was largely in line with economists’ expectations.
“Personal consumption has been particularly hard-hit by the Covid-19 emergency measures,” Naoya Oshikubo, senior economist at SuMi TRUST, said in an analysis issued ahead of the official data.
The figures released by the cabinet office shortly before markets opened showed private consumption fell 1.4%, following two quarters of expansion, reflecting slower spending in the services sector.
Capital expenditure, including manufacturing, was down 1.4%, but economists said that was only relative to a sharp increase in the previous quarter and the overall recovery trend was on track.
The drop in private consumption was not as bad as some had feared, said Marcel Thieliant, senior Japan economist at Capital Economics.
The two “big disappointments”, he wrote in a note, came from drops in non-residential investment and public demand. Meanwhile, housing investment rose 1.1%.
And while exports were up 2.3&, imports rose by a larger 4.0%, “so net trade knocked 0.2%-points off GDP growth,” Thieliant added.
Economists warn that the slowdown is likely to continue, with the government forced to impose a third state of emergency in several parts of the country – including economic engines Tokyo and Osaka – earlier this month.
The emergency measures are tougher than in the past, and have been extended to the end of May as well as expanded to several other regions in recent days.
Source: The Guardian
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