Japanese economy suffers setback due to Coronavirus

After Britain (UK), now Japan has also fallen victim to economic recession due to Coronavirus. Japan’s economy has suffered a major setback in the second quarter of this financial year. In the April-June quarter, Japan’s GDP has decreased by 27.8 percent against the annual rate. This is the largest decline in GDP since Japan provided data in 1980. The situation is that due to the pandemic, people in Japan do not even have the income to spend.

Given the increasing difficulties on the economic front Japan, in the end of May began to remove the lockdown and with that the economy started to get back on track, but many analysts believe that whatever will be better in the July-September quarter, it will remain limited because people are spending after a lot of thoughts due to new cases of infection. This was the third consecutive quarter in Japan when the economy fell. It was estimated that GDP could shrink by 27.2 percent. The government released its data on Monday and it was more than this.

There has been a huge decrease in consumption and export

According to a BBC report, Takeshi Minami, the chief economist of the Norinchukin Research Institute, said – the reason for this big decline is the decrease in consumption and exports. ‘I expect the gains to be positive in the July-September quarter. But globally, in every part of the world except China, the economy is returning to slow pace. Private consumption accounts for more than half of Japan’s total economy. It has registered a decline of 8.2 percent in this quarter. Due to the lockdown people were at home and they reduced the expenditure.’ Japan has released a massive fiscal and monetary package to reduce the impact of the epidemic. Japan’s economy was already facing the impact of increase in sales tax and trade war between USA and China.

Analysts had estimated that private consumption could fall by as much as 7.1 percent. But this decline was more than this and is the highest on record so far. On the other hand, there has been a fall of 1.5 percent in the capital expenditure, whereas the estimate was projected to fall by 4.2 percent. The gap between external demand i.e. export and import has also reduced and due to this Japan’s GDP has decreased by 3 percent. Due to the pandemic, the demand for things has reduced worldwide. The Japanese government started removing the lockdown at the end of May due to which the economy was returning to track, but due to increasing cases of infection, the economy is once again clouded. Domestic expenses are also coming down which is affecting the business.