TOKYO (AP) – Japan’s economy shrank in April-June at an annual rate of 27.8%, the worst contraction on record since the coronavirus pandemic hit consumers and traders, according to government data released Monday .
The Cabinet Office reported that Japan’s preliminary seasonally adjusted real gross domestic product, as GDP, the sum of a nation’s goods and services, fell 7.8% per quarter.
The annual rate shows what the number would have been if it had continued for a year.
Japanese media reported that the last drip was the worst since World War II. But the Cabinet Office said similar records began in 1980. The previous worst contraction was in 2009, during the 2008-2009 global financial crisis.
The world’s third largest economy was already sick when the outbreak of viruses struck late last year. The fallout has since gradually diminished in COVID-19 cases and social distance limits.
The economy shrank 0.6% in the period January-March, and contracted 1.8% in the period October-December last year, which means that Japan slipped into recession in the first quarter of this year. Recession is generally defined as two consecutive quarters of contraction.
Japanese economic growth was flat in July-September. The growth was at least the quarter before.
For the period April-June, Japan’s exports fell at a very annual rate of 56%, while private consumption fell at an annual rate of almost 29%.
That was without complete closure of companies to contain coronavirus outbreaks, which have been declining over the past month, and the total number of confirmed cases has skyrocketed to more than 56,000.
Analysts say the economy is expected to recover slowly once the pandemic’s impact is curtailed. Japan’s export – dependent economy is heavily dependent on growth in China, with outbreaks of the new coronavirus beginning and declining since then. But the question has remained subdued.
Developing a vaccine as a medical treatment for COVID-19 would also help, but the prospects for such breakthroughs are unclear.
Since GDP measures what the economy did compared to the previous quarter, such a deep contraction is likely to be followed by a rebound unless conditions continue to disappear.
This does not necessarily mean that the economy will return to pre-pandemic levels. Some experts doubt air travel and other sectors will ever fully recover.
On the other hand, some companies have reaped the benefits of people staying at home, such as the Japanese video game maker Nintendo Co., whose recent profits have boomed.
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This version has been corrected to show the previous worst contraction was in 2009, not 2008-2009, and that the reference past in the quarter of October was October-December, not October-November.
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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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