Japan economy shrinks for 1st time since 2009

19 Feb '21

2 min read

Pic: Shutterstock

Japan’s economy shrank last year by 4.8 per cent for the first time in more than a decade due to the impact of the novel coronavirus pandemic, but the contraction was less than expected and it ended the year on a strong note, thanks to a rise in exports and government support. Analysts, however, caution the near-term outlook could be bumpy as fresh virus restrictions dampen domestic consumption.

The country is still closed to tourists six months before the postponed Olympics are scheduled to start.

The contraction was better than forecast in a Bloomberg survey of analysts because of a strong October-December performance, which saw the economy expand by 12.7 per cent from the previous quarter on an annualised basis.

But observers told a global newswire the economy will not likely receive the much-needed boost from the summer’s postponed 2020 Olympics, even as organisers insist the event will go ahead even if the pandemic is not fully under control.

With doubts over whether foreign spectators will be allowed to attend and plans for athletes and officials to stay isolated during the Games, there will not be much chance for spending, said Anwita Basu, head of country risk for Asia at Fitch Solutions.

“The growth outcome of zero spectators and Games not being held would be roughly the same,” she told the newswire.

Anti-virus measures and other delay-related costs have added 294 billion yen ($2.8 billion) to the event’s price tag, which has ballooned to at least 1.64 trillion yen -- making Tokyo 2020 potentially the most expensive Summer Olympics in history.

Fibre2Fashion News Desk (DS)

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