Japan’s GDP Falls 3.4% as Covid-19 Hurts its Economy, Leading into a Technical Recession

Japan’s economic growth in January-March shrank at an annualized rate of 3.4%, a contraction for the second consecutive quarter that led Japan into a technical recession due to a coronavirus pandemic, the Cabinet Office reported on Monday.

Analysts said things are expected to get worse, as the world’s third-largest economy undergoes its biggest challenge since World War II.

Japanese economy were defined as technical recession since the country has been experiencing a 1.9% fall in October-December and a 0.9% decrease in January-March, two quarters straight of contraction.

Exports plunged 21.8%. Private residential investments dropped nearly 17%, and household consumption slipped 3.1%.

Japan is extremely vulnerable as given its dependence on trade with both China and the U.S., the country where the pandemic began and the country where it has been hit hardest.

Travel, tourism and trade with those countries and others have languished amid nation’s shutdowns. 

Economists stated the worst is still to come. Japan’s economy is expected to decline 5.8% in the April-June quarter, or at an annualized pace of 21%, according to a survey by JCER

The Abe government has already passed a emergency stimulus package of nearly 108 trillion yen ($1 trillion), and plans more, to help households and businesses suffering from the impact of the Covid-19 outbreak.