Economists project Japan GDP shrank 26.6 pct in April-June amid pandemic

Kyodo News

Posted at Aug 13 2020 07:11 PM

A man wearing a face mask stands at Shiba Park as the landmark Tokyo Tower is lit up at dusk in Tokyo on May 12, 2020. Philip Fong, AFP

TOKYO - Japan's economy in the April-June period is projected to have shrunk an annualized real 26.59 percent from the previous quarter due to the coronavirus pandemic, in what would be the biggest contraction in four decades, according to a survey of economists at private institutions released Thursday.

On a seasonally adjusted quarterly basis, the 34 economists predicted an average contraction of 7.41 percent in the country's gross domestic product in the three months compared to the January-March period, said the Japan Center for Economic Research that conducted the survey from July 30 to Aug. 7.

The third consecutive quarterly GDP contraction would be the biggest annualized decline since the April-June period of 1980 when comparable government data became available.

It would also exceed the 17.8 percent contraction in the January-March quarter of 2009 in the wake of the global financial crisis triggered by the collapse of Lehman Brothers Holdings Inc.

The spread of the virus has taken a heavy toll on the Japanese economy, as the government asked people to stay at home and nonessential businesses to suspend operations under a state of emergency, which was first declared on April 7 for Tokyo and six other areas and later expanded to the entire nation for about a month.

Private consumption, which accounts for more than half of Japan's GDP, is projected to have plunged 6.90 percent from the previous quarter, while capital spending is estimated to have decreased 4.57 percent.

Exports and imports of goods and services were forecast to have declined 18.52 percent and 1.35 percent, respectively.

The Cabinet Office is scheduled to release preliminary GDP figures for the second quarter of 2020 on Monday.

The economists also forecast that GDP would recover significantly in the July-September period with average annualized growth of 13.26 percent, given the gradual resumption of economic activity following the complete lifting of the state of emergency in late May.

As for the October-December quarter, the economists expect annualized growth of 4.71 percent.

The Japanese economy shrank an annualized 7.2 percent in the October-December period of last year, hit by a consumption tax hike from 8 percent to 10 percent implemented in October and the impact of a devastating typhoon. In the January-March period, Japan saw its economy contract 2.2 percent as the virus started to spread nationwide.