Sunday, 29 March, 2020, 3:05 PM
latest IEDCR: No new case in country in 48hrs       Italy death toll passes 10,000 with 889 in a day        First Bangladeshi dies in Qatar from coronavirus       Coronavirus death toll passes 30,000 worldwide       Bangladesh ready to work with UK on coronavirus issue: PM      
Home Business

Japan on brink of recession as economy contracts

Published : Tuesday, 18 February, 2020 at 12:00 AM  Count : 134

TOKYO, Feb 17: Japan's economy shrank at the fastest pace in almost six years in the December quarter as a sales tax hike hit consumer and business spending, raising the risk of a recession as China's coronavirus outbreak chills global activity.
Analysts say the widening fallout from the epidemic, which is damaging output and tourism, could have a significant impact on Japan if it's not contained in coming months.
"There's a pretty good chance the economy will suffer another contraction in January-March. The virus will mainly hit inbound tourism and exports, but could also weigh on domestic consumption quite a lot," said Taro Saito, executive research fellow at NLI Research Institute.
"If this epidemic is not contained by the time of the Tokyo Olympic Games, the damage to the economy will be huge," he said.
Japan's gross domestic product (GDP) shrank an annualized 6.3per cent in the October-December period, government data showed on Monday, much faster than a median market forecast for a 3.7per cent drop and the first decline in five quarters.
It was the biggest fall since the second quarter of 2014, when consumption crumbled after a sales tax hike in April of that year.
The weak data also comes amid signs of struggle in the wider region with the coronavirus, leaving Japan vulnerable to a recession - defined as two consecutive quarters of contraction.
Singapore cut its economic growth projections for 2020, Thailand posted its slowest expansion in five years and China's home prices rose at their weakest pace in almost two years.
Japanese stocks slipped on the recession prospects with the benchmark Nikkei average .N225 down 0.7per cent.
The sales tax hike in October last year - as well as unusually warm weather that hurt sales of winter items - weighed on private consumption, which sank a bigger-than-expected 2.9per cent, marking the first drop in five quarters.
Capital expenditure fell 3.7per cent in the fourth quarter, much faster than a median forecast for a 1.6per cent drop and the first decline in three quarters, the data showed.
Combined, domestic demand knocked 2.1 per centage points off GDP growth, more than offsetting a 0.5 point contribution from external demand.
Japanese policymakers had warned that the economy will suffer a contraction in October-December as the sales tax hike, typhoons and the Sino-US trade war hurt consumption and factory output.
Still, the weakness in capital expenditure - considered among the few bright spots in the economy - casts doubt on the Bank of Japan's view that growth will continue to expand moderately as robust domestic demand makes up for faltering exports.
A Reuters poll of eight analysts, conducted after the GDP release, forecast Japan's economy will contract an annualized 0.3per cent in the first quarter, though the prediction is subject to change depending on upcoming data for January and February.
BOJ Governor Haruhiko Kuroda said the central bank would consider additional easing if the coronavirus outbreak significantly threatened Japan's economy and price trends, the Sankei newspaper reported on Monday.      -Reuters

« PreviousNext »

Latest News
Most Read News
Editor : Iqbal Sobhan Chowdhury
Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
Editorial, News and Commercial Offices : Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000. Phone :9586651-58. Online: 9513959, Advertisement: 9513663
E-mail: [email protected], [email protected], [email protected], [email protected],   [ABOUT US]     [CONTACT US]   [AD RATE]   Developed & Maintenance by i2soft