The Japanese economy suffered severe growth losses in the second quarter. According to preliminary reports, economic output fell by 7.8 percent compared to the previous quarter, the third consecutive drop. The corona pandemic, which triggered the declaration of a national emergency in April and May, has thus now led to an even more severe economic setback than the last global financial crisis in 2009.
The fact that private consumption in particular fell sharply in the last quarter (-8.2 % Q/Q) was to be expected in view of the anti-corona restrictions. After all, many shops had been closed at least temporarily, companies had announced production stops and unemployment had climbed to its highest level in three years in May. The reluctance to consume had also been clearly reflected in the sentiment indicators of the economy. However, it is clearly disappointing that government consumption was also negative in the second quarter (-0.3% Q/Q). Here, one could have expected that the expansionary measures of the government, which after all has put together two large fiscal packages since April, would have taken more effect before the middle of the year.
In the end, however, the decline in private investment (-1.5 %) and the sharp decline in exports also contributed decisively to the negative quarterly result. Due to the recessionary global economy, exports fell by double digits in Q2. Net exports alone cost around three „growth percentages“. However, there have recently been the first signs of a recovery, partly because demand from China has picked up again.
The deeper the fall, the more dynamic the economic recovery? Whether there will be similarly strong „rebound“ effects in Japan in Q3 as we expect for some European countries, for example, seems doubtful at this time. Many sectors of the Japanese economy, such as tourism and the hotel and restaurant industry, but also other service sectors, will continue to fail as growth drivers for the time being, and the dependence of many Japanese companies on good export demand, which is not yet apparent in the short term, is also dampening economic optimism.
This is exacerbated by the fact that the latest corona figures have again shown an unexpectedly strong upward trend. Japan has recently reported more new daily infections than Germany. If another „national emergency“ with far-reaching restrictions were to occur, a short-term economic upswing would hardly be conceivable.