TOKYO (BLOOMBERG) – Japan’s economy shrank last quarter less than first reported, according to figures that come as yet another round of restrictions to contain the coronavirus threatens to prolong the slump.
Gross domestic product contracted an annualized 3.9 per cent from the final quarter of 2020, the Cabinet Office reported on Tuesday (June 8). The result was better than the government’s earlier estimate of a 5.1 per cent contraction. Economists had forecast a 5 per cent drop.
A separate report showed wages gained in April from a year earlier at the fastest pace since late 2018 on climbing overtime pay.
Since the start of the year, Japan’s recovery has been put on pause by on-again-off-again declarations of emergency to try to contain virus flareups. A vaccine drive that didn’t kick into high gear until recent weeks has allowed the crisis to drag on, even if case numbers are still far below US or European levels.
With restaurants and bars being advised to close early, consumer spending has taken a hit and service businesses have chosen to cut or at least postpone investment until the outlook is clearer.
While exports continue to rebound, the latest round of restrictions set to last through mid-June – about a month before the planned start of the Tokyo Olympics – have raised the risk the economy could shrink again this quarter. That would mean a double-dip recession, although most analysts still see Japan eking out growth this spring.
So far, another large-scale stimulus package from Prime Minister Yoshihide Suga’s government doesn’t seem to be on the cards. Finance Minister Taro Aso last month said he doesn’t think Japan needs to compile another budget to deal with the pandemic because there’s 4 trillion yen (S$48.6 billion) left in a reserve fund.