Tokyo: According to data released on Wednesday, Japan’s economy shrank at a worse than expected annual rate of 1% in the first quarter due to rising prices and COVID-19 restrictions.
Japan’s real GDP, or GDP, the sum of the value of a country’s products and services, shrank 0.2% in January-March compared to the previous quarter, the Cabinet Office said.
The world’s third-largest economy achieved modest growth last year but sank in the preceding quarter.
Russia’s war in Ukraine has exacerbated already high energy prices and a massive debt to resource-poor Japan. The Japanese yen has weakened, trading at 130 yen against the dollar, making imports relatively expensive.
Japan has never had a lockdown but has periodically banned businesses, asking most restaurants and bars to close early to stem the spread of the coronavirus pandemic. The last such restrictions ended in March.
Some medical experts say the nation has since seen an increase in COVID-19 cases, because of the more infectious Omicron variant. Japan has so far recorded nearly 30,000 COVID-19-related deaths.
Analysts say that the reimposition of restrictions to contain the spread of infection and the impact of inflation on household spending power is driving growth on the downside.
But some expect economic recovery in the coming months.
Takayuki Toji, an economist, said: “After a disappointing start to the year, we expect the economy to bounce back this quarter thanks to the complete lifting of COVID-19 restrictions in Japan, particularly on improving consumer spending. in services.” Sumi Trust.