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Japan’s economy contracts at the fastest pace in six years

Japan economy contracts at the fastest pace in six years

The Japanese economy reported its fastest contraction pace in six years in the last quarter of 2019 as sales take rise and weak global demand pulled down consumer and business spending.

GDP recorded an annualized contraction of 6.3 percent in the October-December period, the strongest fall since 2014, while economists had predicted a 3.7 percent drop.

The quarter-on-quarter reading showed a 1.6 percent fall from an upwardly revised growth of 0.4 percent in the third quarter. Analysts had estimated the third-largest economy to shrink by 1 percent.

Private consumption and capital expenditure sagged by 2.9 percent and 3.7 percent respectively after a sales tax increase in October.

The situation may get more difficult as Japan may relapse into recession as the whole Asian region currently suffers from the Coronavirus.

However, Economy Minister Yasutoshi Nishimura stressed that the government was ready to take all needed steps to combat the negative impact of the corona epidemic.

So far, Japan has 413 confirmed cases of the coronavirus, including one death, where it is currently the second-most affected country after China.

Japanese policymakers had warned that the economy would contract in the last quarter due to the sales tax increase, typhoons and the US-China trade war.

The benchmark Nikkei 225 index plummeted 0.69 percent today to finish at 25,532.24.

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