Since the economy all around the world is in a slump due to the ongoing pandemic, Japan, one of the largest economies of the world is adversely affected by it. Before the coronavirus outbreak, Japan suffered from severe typhoons and hike in taxes which resulted in 1.9 percent fall off after a reduction of gross domestic product at the end of 2019.
While Japan is in a fight with the coronavirus pandemic, the official figures state that the economy of the country has diminished by 0.9 percent. Some experts have also speculated that the economy of Japan would shrink further as the coronavirus outbreak continues. When a decline in the gross domestic product is recorded in two successive quarters, it is designated as an economic recession.
The senior economist from SuMi TRUST, Naoya Oshikubo said that a worse decline in the economy is expected as Japan is in an emergency state and the coronavirus pandemic continues to be severe in the western countries which have negatively impacted the economic state of Japan.
However, the shrinkage in the economy was not as bad as predicted by economists in the first quarter of 2019. A decline of 1.1 percent economy was expected as a result of the coronavirus outbreak.
The outbreak in Japan is not as adverse as the rest of the large economies of the world. Until now, there have been only 16,000 coronavirus cases all across the country and not more than 750 fatalities due to COVID-19.
The authorities of the country were predicting that there is a possibility of a spike in the curve specifically in Tokyo which is the most highly populated city as well as the capital of the country. Hence, it was advised to the people to stay inside and restrictions in local businesses were implemented in the country.
An emergency state was announced in the country by Prime Minister Shinzo Abe. However, the lockdown was lifted all over Japan except last week with an exception of Tokyo and Osaka which are the largest economic regions of the country.
Oshikubo said that due to the coronavirus pandemic since people are staying indoors, the consumer spending has declined to a great level due to which personal consumption has been a loss. The economic expert also said that a state of uncertainty is prevalent over the country due to which capital investment from private companies has been cut back as they have limited their expenditures.
However, the Prime Minister has announced to compensate every citizen of Japan with 100,000 yen which is equivalent to $930 as an effort to alleviate the effects of the economic crisis in the country.
The relief program announced by the government on account of the outbreak consists of a package worth almost one trillion dollars that will be spent to sustain the health sector of the country, protect the jobs of people, and financially mitigate the working class.
The coronavirus has also forced the country to postpone the Tokyo Olympics 2020 that was going to be hosted in Tokyo and was much anticipated all over the world which has resulted in a huge economic loss. The country’s tourism has also declined by 90 percent while the trade in the country has been put to a halt due to the virus.
The economy of Japan is expected to rise only when the coronavirus outbreak is controlled and also on the number of COVID-19 cases in the country.