Japan's economy shrank at the fastest pace in almost six years in the Decem...
TOKYO - Japan’s economy shrank at the fastest pace in almost six years in the December quarter as last year’s sales tax hike hit consumer and business spending, highlighting a fragile outlook made worse by growing coronavirus risks.
“There’s a pretty good chance the economy will suffer another contraction in January-March. The virus will mainly hit inbound tourism and exports, but could also weigh on domestic consumption quite a lot,” said Taro Saito, executive research fellow at NLI Research Institute. It was the biggest fall since the second quarter of 2014, when consumption took a hit from a sales tax hike in April of that year.
Combined, domestic demand knocked 2.1 percentage points off GDP growth, more than offsetting a 0.5 point contribution from external demand. “The government had hoped Japan’s economy would continue a moderate recovery. But we must be vigilant against the impact of the coronavirus on domestic and overseas economies,” he said in a statement issued after the GDP’s release.
“There’s not a lot more the BOJ can do either ... Additional easing may do more harm than good to the economy,” he said.
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