JAPAN’S economy officially plunged into recession in the past quarter, official figures confirmed yesterday.
The devastating earthquake and tsunami that hit the country in March was partly responsible for an unexpectedly sharp 0.9 per cent drop in GDP in the opening three months of the year.
“The second-quarter data will be even worse,” warned Julian Jessop of Capital Economics.
“While it is true that the economy will almost certainly start to grow again in the second-half of the year, there will still be major headwinds,” Jessop said.
Yesterday’s result translated into an annualised contraction of 3.7 per cent, much worse than forecasts, and contrasting with annualised growth of 1.8 per cent in the US in the same quarter.
Private consumption, which makes up about 60 per cent of the economy, fell 0.6 per cent, as consumers cut spending after the quake.
External demand, or net exports, pushed down GDP by 0.2 percentage points, as the disaster disrupted supply chains and prevented Japanese manufacturers from shipping goods abroad.
“The release of radioactive material into the environment and the sea may further hamper net exports,” warned Tim Ohlenburg of the Centre for Economic and Business Research yesterday.