Japan suffered the worst fall in 5 years of its gross domestic product (GDP) in the 4th quarter of 2019, weighed down by an increase in the consumption tax. He is now under threat from the coronavirus.
A recession (two consecutive quarters of decline) appears likely due to the still difficult to measure repercussions of the coronavirus epidemic. Japan is currently the second focus of the disease behind China.
Compared to that of the previous three months, the archipelago’s GDP dropped 1.6% between October and December last year, the drop in October from 8% to 10% of the VAT on most goods and services having dissuaded consumption.
This decline, the first seen in five quarters, was expected by analysts. It is nonetheless more severe than expected, and the worst since that of 1.9% which had followed a previous VAT increase in April 2014.
Olympics in less than six months
Transcribed at an annual rate, the decline in the 4th quarter of 2019 corresponds to a fall of 6.3%, the government said. Over the whole of 2019, Japanese growth thus stood at 0.7%, the executive said. However, this figure may be revised later, as well as that of the 4th quarter.
Household consumption, the main cause of the plunge observed at the end of last year, fell by 3% over a quarter. Many consumers made their large purchases before the VAT hike, hence the aftermath.
The Japanese also suffered from the passage of several deadly typhoons, which had an impact on trade. And the new coronavirus poses a serious threat. For Takashi Shiono of Credit Suisse Securities, “the repercussions of the coronavirus are to be feared on the service sector”.
The flow of Chinese tourists that have fueled Japanese economic growth in recent years has come to a halt since Beijing has de facto prohibited its nationals from spending their holidays abroad. This epidemic is all the worse for Japan since the Tokyo Olympics are to be held in less than six months.