Japan’s Jan.-March GDP contracts 5.1%, 1st shrinkage in 3 qtrs

May 18 , 2021. 23 minutes ago – 09:35 KYODO NEWS

TOKYO – Japan’s economy in the January-March period contracted an annualized real 5.1 percent from the previous quarter, the first shrinkage in three quarters, as a second state of emergency over the coronavirus pandemic dented consumption, government data showed Tuesday.

The decrease in real gross domestic product, the total value of goods and services produced in the country adjusted for inflation, corresponds to a 1.3 percent contraction on a seasonally adjusted quarterly basis, according to the preliminary data released by the Cabinet Office.

The data also showed that GDP in fiscal 2020 through March decreased a real 4.6 percent from a year ago, down for the second straight year. It is the largest annual contraction on record since data began to be compiled in fiscal 1955.

The previous record contraction was a 3.6 percent shrinkage in fiscal 2008 logged in the wake of the global financial crisis.

Facing a resurgence of virus infections since November, the government declared its second state of emergency in early January for the Tokyo metropolitan area, and expanded it to 11 out of Japan’s 47 prefectures within a week. It was fully lifted in late March.

With requests for people to stay at home, and restaurants and bars to shorten operating hours to curb the virus spread, the measure led to a sharp drop of 1.4 percent in private consumption, which accounts for more than half of GDP in the world’s third-largest economy, from October to December.

Looking ahead, some analysts predict Japan will continue to see a contraction in the current April-June period, as another emergency issued late last month now covers Tokyo and eight prefectures amid the spread of more contagious virus variants, with the country lagging behind other major economies in its vaccine rollout.

After marking the record sharpest GDP drop in 2020’s second quarter due to the nation’s first virus emergency from April to May, the Japanese economy enjoyed a strong recovery until the October-December quarter as the gradual resumption of economic activity lifted consumption and exports.

The latest quarterly GDP decline was worse than the average projection of an annualized 4.61 percent shrinkage by private-sector economists.

In nominal terms, or unadjusted for price changes, the economy shrank 1.6 percent, or an annualized 6.3 percent, in the reporting quarter, and 4.0 percent in fiscal 2020.

Revised GDP data for the reporting quarter and fiscal year is scheduled to be released on June 8.