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Japan’s GDP shrinks 2% year-on-year

Tokyo, May 18 (IANS) Japans GDP fell in the first quarter by 2 per cent year-on-year, according to preliminary data published on Monday by the government, representing the second consecutive quarter of economic contraction.

Between January and March, the world’s third-largest economy fell by 0.9 per cent compared to the last quarter of 2019, according to the first estimate made by the Cabinet Office with inflation-adjusted data.

The GDP data provides the first estimation of the impact of the novel coronavirus pandemic on the Japanese economy, which accumulated drops in two consecutive quarters after falling by 0.7 per cent year-on-year between October and December 2019 and 1.8 per cent quarter-on-quarter, reports Efe news.

Household consumption, the main pillar of the Japanese economy, was the factor that most contributed to the fall in the GDP with a drop of 2.8 per cent compared to the same quarter of the previous year.

Domestic spending was clearly affected by the authorities’ recommendations to stay home as much as possible and by the cancellation of massive sporting and cultural events since the beginning of March due to the pandemic.

Exports, another important part of the Japanese GDP, fell by 6.2 per cent year-on-year due to the interruptions in production, problems in the supply chain and a drop in global demand derived from the worldwide spread of the new coronavirus.

In this same scenario, corporate capital investment fell by 4.2 per cent.

However, the state investment increased by 2.5 per cent compared to the first quarter of 2019, driven by the multimillion-dollar stimulus package that the Shinzo Abe government has carried out to mitigate the effects of the pandemic.

At an annualized rate, a measure used to estimate the rate of economic expansion, the Japanese economy fell 3.4 per cent in the first quarter.