Japan’s economy slips into recession amid coronavirus woes

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Japan has entered a recession as the financial cost of coronavirus continues to rise.

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The world's third largest economy shrank 3.4% in the first three months of 2020 compared to a year ago, its biggest drop since 2015.

Coronavirus is wreaking havoc on the global economy, with an estimated cost of up to $ 8.8tn (£ 7.1tn).

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Last week, Germany entered a recession as more large economies face the impact of sustained crashes.

Japan did not enter national confinement, but issued a state of emergency in April, severely affecting supply chains and businesses in the trade-dependent country.

The 3.4% drop in domestic product (GDP) growth in the first three months of 2020 follows a 6.4% drop in the last quarter of 2019, leading Japan to a technical recession.

Stimulus package announced

Consumers were hit by the double impact of coronavirus and the increase in sales tax from 10% to 10% in October.

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While Japan raised the state of emergency in 39 out of 47 prefectures, the economic outlook for this current quarter is just as bleak.

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Analysts polled by Reuters expect the country's economy to shrink 22% between April and June, what would be its biggest decline on record.

The Japanese government has already announced a record $ 1 trillion stimulus package, and the Bank of Japan expanded its stimulus measures for the second consecutive month in April.

Prime Minister Shinzo Abe promised a second budget later this month to finance new spending measures to cushion the pandemic's economic blow.

Other economies see melancholy

Last week, the Asian Development Bank (AfDB) warned that the global economy could face an impact of between $ 5.8 and $ 8.8, due to the coronavirus pandemic.

The US economy, the largest in the world, suffered the biggest decline in the first quarter of 2020 since the Great Depression, falling 4.8%.

China, the second largest economy in the world, saw economic growth shrink 6.8% in the first three months of the year, its first quarterly contraction since records began.

Both economies have yet to be confirmed as having fallen into a technical recession, which is defined as two consecutive quarters of negative growth, but most economists expect them to occur in the coming months.

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