TOKYO (Xinhua) — Japan’s economy shrank 4.8 percent in real terms in 2020 from a year earlier, marking the second sharpest contraction since record-keeping began, owing to the adverse effects of the novel coronavirus pandemic, the government said in a report Monday.
According to the Cabinet Office, real gross domestic product contracted for the first time since a 5.7 percent decrease was logged in 2009 in the wake of the global financial crisis.
The Cabinet Office’s preliminary data also showed that private consumption, which comprised more than half of Japan’s GDP, dropped 5.9 percent in the recording period.
The decline was attributed to the government’s first state of emergency over the COVID-19 pandemic issued on April 7 last year for some regions including the capital, before being expanded to cover the entire country on April 16.
The government’s spring nationwide state of emergency over the virus requested that people stay at home and work remotely and a large percentage of non-essential businesses shutter their operations, leading to private consumption being hammered amid slumping domestic and overseas demand.
Private capital expenditure fell 5.8 percent in the recording year, the office’s preliminary figures showed, while private residential investment slumped 7.1 percent.
Imports were down 6.8 percent, with the decline exacerbated by a fall in crude oil and related prices, the Cabinet Office said, while exports were hampered by supply chains being disrupted by domestic business shutdowns and overseas lockdowns and on overall falling demand.
In 2020, the size of real GDP came to 529.19 trillion yen (5 trillion U.S. dollars), dropping from 2019’s figure of 555.80 trillion yen, the Cabinet Office said.
“The 2020 GDP figure reflected the very severe situation, while the October-December outcome suggested a bottoming out and the potential resilience of Japan’s economy,” Japanese economic revitalization minister Yasutoshi Nishimura said in a statement on the matter.
In the October-December period, Japan’s economy grew a real 3.0 percent, or an annualized 12.7 percent, from the previous quarter, as demand started to return and businesses rebounded, the Cabinet Office’s data indicated.
In the January-March period ahead, economists believe there will be another contraction pushing the nation’s growth into negative territory.
This is owing to a second state of emergency being issued on Jan. 7 for the Greater Tokyo area, before being expanded to cover a total of 11 prefectures, amid the virus’ resurgence.
The emergency period was then extended for one month to cover all but one of the prefectures and slated to end on March 7.
Analysts said that businesses being requested to shorten operating hours, with bars and restaurants being asked to close doors by 8:00 p.m. and people being asked not to make unnecessary trips outdoors, is again although to a lesser extent, taking its toll on consumption and expenditure. (Xinhua)