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By APD writer Alice
The Cabinet Office of Japan on February 17 published a preliminary report on the country’s economic situation in the fourth quarter of 2019, in which the world's third-largest economy suffered the biggest contraction in the last five years due to a consumption tax hike and consequences of destructive typhoon.
Specifically, in last year’s Q4, Japan's real gross domestic product (GDP) decreased by 6.3% compared to the same period in 2018, marking the strongest decline since the second quarter of 2014. If compared to the third quarter of 2019, real GDP (or nominal GDP adjusted for inflation) was down 1.6%.
The main cause of the decrease was the negative impact of supertyphoon Hagibis and the increase in consumption tax from 8% to 10% in early October 2019.
The previous sharpest decline in the Japanese economy, 7.4% in 2014, was also seen after the government increased the consumption tax from 5% to 8%.
In the last quarter of 2019, personal spending, which accounted for nearly 60% of Japan's GDP, fell by 2.9% from the previous quarter, mainly due to the impact of the consumption tax hike. Besides, according to an official of the Cabinet Office, other factors affecting personal spending were supertyphoon Hagibis, which disrupted transportation system, and production and distribution activities in central and eastern parts of the country in late October last year, and the warm winter weather that reduced demand for products such as clothing and heating equipment.
In addition to personal spending, two other important indicators of GDP, including investment costs and investment costs for individual housing, also fell by 3.7% and 2.7% respectively. Meanwhile, exports and imports also decreased by 0.1% and 2.6%, respectively.
Regarding many people’s concern over the negative impact of the novel coronavirus disease (COVID-19) on the Japanese economy, Minister of State for Economic and Fiscal Policy under the Cabinet Office of Japan Yasutoshi Nishimura said the government would take measures such as using contingency budget to deal with the decline in the number of foreign visitors to Japan, the disruption of supply chains, the slowdown of China's economy and instabilities in financial and capital markets.
(ASIA PACIFIC DAILY)
