The Japanese economy contracted sharply last quarter. A tax increase led to a sharp fall in business and consumer spending in the Asian country.
This is the first contraction for Japan in more than a year. Moreover, the setback is much stronger than the average economists expected. The so-called gross domestic product (GDP) shrank by 6.3 percent on an annual basis in the three months to the end of December, according to new figures from the Japanese government.
The outlook is also not very bright due to the outbreak of the new corona virus. There is a chance that the world’s third economy will again contract in the first quarter of this year, causing the country to officially fall into recession.
According to economists, the virus outbreak can be a major blow to incoming tourism, exports and consumer spending in Japan itself.
“If this epidemic has not been curtailed for the Tokyo Olympics later this year, the damage to the economy will be enormous,” said a researcher from the NLI Research Institute.