Reuters has reported that “Japan’s economy contracted at an annualized rate of 3.4% in January-March, government data showed on Monday, marking the second consecutive quarter, or contraction, meeting the technical definition of recession, because of the corona virus of the pandemic.”
It marked the first recession since the second half of 2015.
The preliminary reading for the first quarter, the gross domestic product (GDP), compared with economists ‘ median estimate for a 4.6% decline in a Reuters poll showed, the Cabinet Office data showed.
It followed a revised 7.3% contraction in the October-December).
Quarter-over-quarter, the GDP contracted by 0.9 in January-March, compared with the median forecast for a 1.2% decline, the data showed.
Private consumption, which accounts for more than half of the economy, fell 0.7%, while capital expenditure decreased by 0.5% and exports slid by 6.0%, it showed.
- Japan / Jan-Mar real GDP, -0.9% q/q (reuters poll: -1.2%).
- Jan-Mar annualized GDP -3.4% (survey: -4.6%).
- Jan-Mar private consumption -0.7% q/q (survey: -1.6%).
- In Jan-Mar capex -0.5% q / q (poll: -1.5%).
- Jan-March, the external demand contribution to GDP -0.2 pct point (poll: 0.0 pct pt).
- Jan-Mar exports, -6.0% t / t.
- Jan-March, the domestic demand contribution to GDP -0.7 pct point.
- Jan-Mar GDP deflator +0.9% year-on-year.
Implications for the market
Japan is in a technical recession (two consecutive quarters of negative economic growth), to be well telegraphed and markets are taking it in their stride today. The USD/JPY has risen just 0.15% on the day, up to now, and has moved up 10 pips on the news.