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Japanese economy is shrinking at record speed – Vorarlberger Nachrichten

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The Japanese economy saw the biggest economic decline on record in the second quarter as a result of the coronavirus pandemic. The gross domestic product (GDP) shrank from April to June on an annual basis by 27.8 percent, as government data showed on Monday. This is the largest decrease since comparable data began to be recorded in 1980.

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Analysts had expected a decline of 27.2 percent. Japan’s economy is shrinking for the third quarter in a row. Restrictions to contain the virus outbreak put pressure on business and private spending: private consumption, which accounts for more than half of the Japanese economy, fell by 8.2 percent in the quarter, analysts had assumed 7.1 percent. Investments fell by 1.5 percent and were thus below the average market forecast for a decline of 4.2 percent. A lack of foreign demand depressed GDP by a further 3.0 percentage points.

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Japan had put massive monetary stimulus in place to cushion the blow of the pandemic on the economy, which had already been hit by the sales tax hike last year and the US-China trade war. Following the easing of restrictions in late May, many analysts expect a modest recovery in growth from July to September as a renewed surge in infections tarnishes the outlook for business and budget spending.

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