If these early decades of 21st century were not bad enough for an already stagnated economy that Japan had become, the COVID-19 pandemic has come as the economic grim-reaper. Halting the resurgence of Japanese economy as some in the ruling regime would make us believe. The economic downfall was expected, but the sheer intensity of its impact backed by the statistics makes it all the more scarier. The last quarter of April-June 2020 saw a drop of annualized 27.8 percent in real terms from the previous quarter, caused by the restrictions on economic activities under state of emergency due to the pandemic. According to Cabinet Office the Gross Domestic Product (preliminary) data corresponds to a 7.8 percent decrease on quarterly basis. Thus marking negative growth for the third consecutive quarter.
“Comparable data are available since the April-June quarter of 1980, but a Cabinet Office official said the latest figure is considered the largest shrinkage on record dating back to 1955, when reference values can be traced to.” – The Japan Times
The COVID-19 pandemic hit an economy already challenged by the US-China Trade War and the consumption tax hike (Oct’19), which occured for the first time in the last five years. In addition to this, the pandemic is accompanied by an aggressive People’s Republic of China on all its fronts, be it Hong Kong, India, Taiwan, etc. Forcing Japan to take a stance against its economic interests and putting it in a difficult position, literally between a rock and a hard place.
With falling public consumption, private capital expenditure and sliding private residential investment, the uncertainties on economic outlook persist, still there is hope. As per the experts, given the gradual resumption of economic activities, the economy will rebound by over 10 percent in the next quarter. However, it will take well over a few years for the economy to comeback to pre-pandemic levels.
Author is a journalist specializing in international relations with extensive experience working with online media. He has a keen interest in all things geopolitics and thence enjoys writing on issues pertaining to Foreign Policy, International Relations, Strategic and Security Affairs of Indo-Pacific Region.