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Japan’s economic output fell 1.3 percent in the first quarter of 2021, a 5.1 percent year-on-year drop as Covid-19’s renewed state of emergency came into consumer spending.
It was a decline slightly worse analysts forecast a 1.2% decline in expectations and a contraction in the economy expanded in the final quarter 2020.
The sharp decline in production has suggested that Asia’s richest economy will be slow due to the pandemic’s rebound. delay expansion coronavirus vaccines.
As major Japanese cities are under restrictions to control the spread of Covid-19, the economy could shrink further in the second quarter, and economists will see year-round growth forecasts.
“We still have quite a bit of a downward revision of GDP in 2021,” said Rob Carnell, ING’s Asia-Pacific research chief. Most analysts forecast year-over-year growth of more than 3%, but reaching that level will require a huge rebound in the second half.
This is probably why Japan will lag behind the economic recovery in Europe and the US, as the rapid spread of vaccines was combined with a great fiscal stimulus Under the command of President Joe Biden, demand has quickly revived.
Japan declared Covid-19 a renewed state of emergency in early January, then extended in March, affecting the economy for most of the first quarter. According to the emergency statement, people were asked to work from home whenever possible and were ordered to close restaurants at 8 p.m.
Another one state of emergency it began in late April, but has not brought the number of cases under control, and Japanese authorities have expanded the geographical scope and severity of the restrictions.
Infections number about 6,000 a day, the highest level since early January. Medical systems in some parts of the country are under great strain.
Underneath the need for continued reductions in public health is the slow progress of vaccines. Japan has given its first dose to a population of 4.4 million, just 3.5% of the population, and has become one of the slowest in the industrialized world.
The weakness was widespread throughout the economy during the first trimester. Consumption was down 0.7 percentage points on total production and business investment contributed 0.2 percentage points to the decline, while government spending and net exports were also weak.
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