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No lockdown, Japanese Economy Continues Recession

Japan’s economy deepened. The economy contracted again in the second quarter of 2020 by -7.8% on a quarterly basis. Meanwhile, the second-quarter economy was -27.8% year-on-year or yoy. This happened because of the pandemic of the Corona virus that has disrupted the economy.

The handling of Corona in Japan was praised by the Indonesian government for failing to achieve a total lockdown in dealing with the pandemic. However, economic activity continued to decline significantly as workers and consumers chose to stay at home.

We got a big hit in April and May, but the economy we even reached had bottomed out in May, and in June a pretty big revival, “said Izumi Devalier, the main Japanese economist at Bank of America Merrill Lynch. Times

Although the abyss of dein goes recession towards the end of the second quarter of 2020, the full impact of the economic stimulus package of around 40% of gross domestic product, including cash and interest free loans is already noticeable. The rising sun country is expected to come out of the recession earlier than thought. 

The increase was largely due to the end of the country’s national emergency in late May, when workers returned to offices and consumers returned to shops, supported by government subsidies.

“We had a reopening in June when the people started. go out and do some shopping. Cash donations are basically received from the end of May to June, so when the economy reopens, people have money to spend, “Devalier said.

That was a surge in retail sales in June. Industrial production and exports also increased and levels were higher, the country’s unemployment rate even dropped by a tenth of a point to 2.8% in the same month.

But it all depends on how the country is controlling the Coronavirus. So far, the country has reported more than 1,100 deaths, far less than its neighbors …

in June, as the number of viral lower central governments began a campaign to encourage domestic travel in hopes of reviving local tourism and the service economy. But the new cases rose again in July ,

The governor of Okinawa and Aichi prefecture in Japan has put pressure on the central government. The Tokyo government has asked restaurants and bars to close at 9 a.m. 10 nights after the end and month more than 200 new cases per day were reported.

That made consumers nervous and halted the increase in spending in June. So that the recovery in the third quarter of 2020 threatens to become quite weak.

“Companies and consumers have the ability to withstand momentary shocks. But the longer we stay below normal, the longer we stay below normal, there will be a second order effect that will lead to a slower recovery balance,” he emphasized.

Taro Saito, an economist at the NLI Research Institute, said the uncertainty surrounding the virus is difficult to predict in the future. He said it would take at least three years for the Japanese economy to return to pre-pandemic levels.

We are still a long way from what is normal,” he said.

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