business

Japanese economy sinks amid fears about virus impact

26 Comments
By YURI KAGEYAMA

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

©2020 GPlusMedia Inc.

26 Comments
Login to comment

Yup. Amd not just Japan. Tourism throughtout Asia and elsewhere is just the tip of the iceberg. The entire world put too much into manufacturing in one place.

5 ( +12 / -7 )

To make it very clear, this big drop in GDP had zero to do with Coronavirus and loss of tourists.

It had a lot to do with the tax hike and subsequent big drop in domestic demand.

20 ( +24 / -4 )

Domestic demand fell in the quarter at an annual pace of 8.0%. Hurting people's spending was the rise in the consumption tax from 8% to 10% in October.

More specifically, spending for the quarter was down 2.9% (so if this were annualized it would be more like 11.6%).

So by increasing tax revenue by 2% people spent 2.9% less... so a net loss of nearly 1%, not to mention all the tax revenue that isn't being collected due to the tax-back incentives they've been giving if credit cards are used at many places.

Less is more... 2 + 2 = 5... Abenomics!

11 ( +14 / -3 )

I can't believe they're wheeling out the coronavirus excuse this early. The October-to-December period wasn't affected by this virus at all.

The tax increase was the biggest thing, along with the higher consumer prices the LDP is foisting on us, sneaky shrinkflation, and corporations continuing to make people work longer hours for less money

7 ( +16 / -9 )

The headline is wrong. The "fears" here from the virus didn't begin until last month. The stats are for the last quarter, which ended the month before, December. Japan's own decision to raise its own consumption tax was the major factor. The typhoons were another.

19 ( +20 / -1 )

No, it's the LDP-2019 virus.

11 ( +15 / -4 )

Japan's population is falling so naturally demand for goods and therefore growth should fall with or without the coronavirus issue.

If managed properly, falling population in a country that is frankly over populated (the population was 30m less in the 1960's) could offer many benefits. Less consumption, pollution, lower housing density....

Of course it will hurt Japan Incs ego, so they will simply continue borrowing to artificially hold up the economy, and their short-sighted belief that GDP is a good measure of development and progress.

9 ( +12 / -3 )

Japan and South Korea overrelied on China so much. Now, both of them are paying the prices.

In the case of Japan, it paid even tougher price due to the costly Olympics 2020 and tax hiking policy. Adding salts to the open wound.

3 ( +3 / -0 )

If the increase of 2% in sales tax wracked havoc on the economy, maybe the economy was pretty weak to begin with.

12 ( +13 / -1 )

Headline is fine... it says “amid” not “because of” or “due to”

0 ( +5 / -5 )

No economy can shrink with a virius that only took place for one month.I really understand that japanese are good a inventing excuses to their advantage.

-2 ( +8 / -10 )

This joke made my day! Blame the virus for the economic policy goof up. Way to go Japan!

Expats in Japan, please stay on alert, the Japan tax authorities are aggressively targeting the high income individuals since last 6 months.

-3 ( +6 / -9 )

To make it very clear, this big drop in GDP had zero to do with Coronavirus and loss of tourists.

> It had a lot to do with the tax hike and subsequent big drop in domestic demand.

EXACTLY. But this Virus is Abe's best friend. gives him something else to blame the economy on, instead of his own destructive policies.

-1 ( +8 / -9 )

Agree with a lot of the above, but fact is that J government has to either find a way to raise more revenue or spend less if it wants to try and reduce the current ridiculous deficit any time in the next century.

Or it can just turn its back on conventional measures of economic success and accept that with an aging population, declining consumer base, an industrial and economic model that is getting more and more antiquated and a political class that are rooted in the past, GDP growth and inflation are just not that worth pursuing at the expense of all else.

3 ( +3 / -0 )

Somebody just pulled the second bung out of the sinking ship.

-1 ( +4 / -5 )

This is serious. It indicates that the virus has developed the ability to travel back in time to a previous fiscal period.

13 ( +13 / -0 )

"So by increasing tax revenue by 2%..."

An increase of the consumption tax rate from 8% to 10% IS NOT a 2% increase. It is two percentage points, but it is not two percent of revenue.

2 ( +2 / -0 )

I can't believe they're wheeling out the coronavirus excuse this early. The October-to-December period wasn't affected by this virus at all.

Not once in the article or in real life has anyone said the coronavirus is the reason for the economic contraction last quarter. Are you that desperate for anti-Japan talk points?

5 ( +10 / -5 )

If the Japanese government were only spending circa 60-65 trillion yen per year, instead of 100 trillion yen per year, it wouldn't need to keep hiking the consumption tax rate to vainly try to plug the gap.

The excessive spending by the government beyond the country's means is the root cause of this recession, no one should forget it.

2 ( +4 / -2 )

The article and the headline seems to have been written by two completely different people.

One line at the end..

0 ( +0 / -0 )

fx

remember they are spending to "stimulate" the economy - Abenomics.

Trying to monetize the debt but the yen stays stubbornly strong (why no really knows any more) and inflation stays stubbornly low.

You would think by now they would relies its not working and take their medicine - i.e. stop spending all the borrowed money.....

2 ( +2 / -0 )

It's just the beginning. If there's not a quick improvement of the situation, the Olympics ROI are seriously in danger.

0 ( +0 / -0 )

This is all the fault of China, specifically the CCP. You probably wouldn't be blamed for thinking that they did this on purpose.

-1 ( +0 / -1 )

How people in Tokyo could contract the virus from 6 Super spreaders over a 14 day period Google 6 times 6 to 14 to power

0 ( +0 / -0 )

 the yen stays stubbornly strong (why no really knows any more)

Well, I know, and some others do too -- Japan is the world's biggest creditor nation. It's also the world's 3rd largest economy and capable of borrowing its own money with no problems paying itself back....in its own money. That's not too hard to figure out. With the exceedingly low inflation and interest rates, the govt would be crazy if it didnt do this.

 it wouldn't need to keep hiking the consumption tax rate 

It doesn't NEED to hike. That policy is more of a political decision than an economic one.

0 ( +0 / -0 )

The headline is wrong. The "fears" here from the virus didn't begin until last month. The stats are for the last quarter, which ended the month before, December. Japan's own decision to raise its own consumption tax was the major factor. The typhoons were another.

Yes, if only they'd mentioned that in the article, instead of using evasive, copout phrases like "growth was battered by typhoons" and "hurting people's spending was the rise in the consumption tax". Gave completely the wrong impression. If you hadn't dropped by to clear things up, we'd never have got at the truth. Luckily, I think we can now conclude that typhoons and consumption tax were to blame. Or was it typhoons and consumption tax? No, it was typhoons and consumption tax.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites