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Japan at risk of recession after worst GDP drop in 5 years

2020-02-17T06:36:01.067Z


In 2019, Japanese growth stood at 0.7%, mainly due to the plunge in household consumption. The economy is under threat from the coronavirus.


Japan suffered the worst fall in 5 years of its gross domestic product (GDP) in the last quarter of 2019, weighed down by an increase in the consumption tax. He is now under threat from the coronavirus. A recession (two consecutive quarters of decline) appears likely due to the still difficult to measure repercussions of the coronavirus epidemic. Japan is currently the second focus of the disease behind China.

Read also: Coronavirus: the world maritime transport makes gray mine

Compared to that of the previous three months, the archipelago's GDP dropped 1.6% between October and December last year, the drop in October from 8% to 10% of VAT on most goods and services having dissuaded consumption . This decline, the first observed in five quarters, was expected by analysts. It is nevertheless more severe than expected, and the worst since that of 1.9% which had followed a previous increase in VAT in April 2014. Transcribed on an annual basis, the decline in 4th quarter 2019 corresponds to a fall of 6.3 %, said the government.

Over the whole of 2019, Japanese growth thus stood at + 0.7%, the executive said. However, this figure may be revised later, as well as that of the 4th quarter. Household consumption, the main cause of the plunge observed at the end of last year, fell by 3% over a quarter. Many consumers made their large purchases before the VAT hike, hence the aftermath.

The Japanese also suffered from the passage of several deadly typhoons, which had an impact on trade. And the new coronavirus poses a major threat. For Takashi Shiono of Credit Suisse Securities, " the repercussions of the coronavirus are to be feared on the service sector ". The flow of Chinese tourists that has fueled Japanese economic growth in recent years has come to a halt since Beijing has de facto prohibited its nationals from spending their holidays abroad. This epidemic is all the worse for Japan since the Tokyo Olympic Games must be held in less than six months.

Read also: Japan: stronger than expected decline in household consumption in December

Source: lefigaro

All business articles on 2020-02-17

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