As of May 18, the Cabinet Office of Japan reported a 3.4 per cent drop in the gross domestic product, or GDP for the January-March period, indicating that country’s economic growth plunged into recession in the first quarter. This comes as the novel coronavirus pandemic halted production, exports, and spending. Therefore, the exports dived 21.8 per cent, private residential investments slumped by nearly 17 per cent, and household consumption declined at 3.1 per cent, shrinking the world's third-largest economy by 0.9 per cent from the prior quarter, as per reports.
As the country entered a recession, the annualized drop rate stood at a shocking 3.4 per cent in the second quarterly contraction amid the restrictions on economic activity due to the COVID-19 outbreak. As per the report by analysts, several other major economies would face recession like Japan, as the households limit spending and businesses slash investments, and the situation is expected to get worse since WWII. According to the latest figures, Japan has entered a technical recession, as its economy contracted 1.9 per cent in October-December, and was a mere 0.5 per cent in April-June, and the growth remained flat in July-September.
According to reports, manufacturers such as Toyota Motor Corp., which are pillars of Japan’s economy, have attained dismal financial results as their profitability nose-dived due to sudden break in manufacturing and production at the plants. Further, the travel, tourism, and trade pummelled as operations were suspended to stem the spread of the disease transmission in the more vulnerable sectors. At least 141 Japanese companies have been pushed to bankruptcy since February due to the novel coronavirus, with more to get impacted towards the end of the month, according to a report released by Tokyo Shoko Research (TSR).
In a statement released for the fiscal year, the TSR estimated a total of 743 companies that went bankrupt in April, of which 71 were virus-related, compared to 645 in April last year, as per reports. Further, most of these small-scale businesses had difficulties in raising funds due to labour shortages and an increase of the consumption tax last year, the statement read. As the world faces the biggest crisis in the global economy, Japanese companies reportedly incurred losses that amount to over ¥50 trillion in just one month while the national state of emergency is in effect.
(Image credit: AP)