Japanese economy experiences worst contraction in history

(Ecofin Agency) – Japan, the third largest economy in the world, saw its GDP fall by 7.8% in the second quarter (April-June), compared to the previous quarter. That is a decrease of 27.8% year-on-year, according to figures released on Monday.

It is the most brutal contraction ever recorded in its history, and which appears to be a direct impact of the Covid-19 pandemic; although these numbers are still slightly higher than analysts’ forecasts.

While it entered a recession at the start of the year, the collapse in growth was caused in particular by the sharp fall in domestic consumption (accounting for more than half of the Japanese economy), and the of exports, against the backdrop of a slowdown in world trade.

Tokyo, however, maintains the hope of a better, after this disastrous quarter. Despite the continuing pandemic, the Land of the Rising Sun is counting in particular on the high quality of its health system, to support the health burden without having to shut down its economy. A rebound is thus hoped for at the end of the third quarter, after this record contraction; a bit like China, whose economy recovered in the second quarter.

Ayi Renaud Dossavi

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