The world’s third-largest economy shrank an annualised 27.8 per cent in April-June, government data showed on Monday (August 17), marking the biggest decline since comparable data became available in 1980 and slightly bigger than a median market forecast for a 27.2 per cent drop.
The main culprit behind the dismal reading was private consumption, which plunged a record 8.2 per cent as lockdown measures to prevent the spread of the virus kept consumers at home. External demand – or exports minus imports – shaved a record 3.0 percentage point off GDP, as overseas shipments plunged 18.5 per cent, with auto exports hit particularly hard.
Falling global vehicle sales have hurt automakers like Mazda Motor Corp and Nissan Motor Co, among the biggest drivers of Japan’s economy, and their parts suppliers.
Capital expenditure declined 1.5 per cent in the second quarter, less than a median market forecast for a 4.2 per cent fall, as solid software investment made up for weak spending in other sectors.
Economy Minister Yasutoshi Nishimura conceded the GDP readings were “pretty severe,” but pointed to some bright spots such as a recent pickup in consumption. “We will continue to make the utmost effort to put it (economy) on a growth path after it bottomed out in April and May,” he told a news conference.