Japan’s economic growth is negative

Specifically, Japan’s real gross domestic product (GDP) decreased by 0.2% quarter-on-quarter and by 1% year-on-year. Thus, Japan’s economic growth continues to fluctuate according to a sinusoidal graph when 3 out of the last 5 quarters experienced negative growth, and in between those 3 quarters, there were 2 positive growth quarters.

This shows that the recovery momentum of the Japanese economy is still very fragile and that Japan’s GDP has not been able to return to pre-pandemic levels. The main reason comes from the country’s strengthening of COVID-19 prevention measures until the end of March.

Rising prices due to a weak yen and conflict in Ukraine also hit consumer spending and growth.

Even so, for the entire fiscal year 2021 ending in March, Japan’s economy still achieved a growth rate of 2.1%. This is the first time Japan has grown positively in the past 3 years.

To reduce the impact of escalating commodity prices on the economy, on May 17, Prime Minister Fumio Kishida’s government approved a draft supplementary budget for fiscal 2022 worth 2.7 trillion yen (approx. 21 billion USD).

Of which, 1,500 billion yen will be spent to supplement the government’s reserve funds to implement some measures in the emergency economic stimulus package such as subsidizing petroleum importers and wholesalers to reduce retail fuel prices in the country; direct cash assistance to low-income households with underage children (including single-parent families) with an allowance of 50,000 yen/child. The remaining amount of 1,200 billion yen will be used to extend the implementation of the petrol price subsidy program until the end of September this year.

For its part, the Bank of Japan (BOJ) kept its ultra-loose monetary policy in place to keep borrowing costs low for households and businesses.

According to a poll conducted by the Japan Center for Economic Research (JCER), in the second quarter of this year, Japan could achieve a positive growth rate of 1.3%, mainly thanks to the government’s lifting of measures. Key epidemic prevention measures after the COVID-19 epidemic has subsided.

However, the growth outlook for the Japanese economy for the rest of this year remains quite precarious due to the impact of inflation, the Russia-Ukraine conflict and the disruption of many supply chains after China’s lockdown. to block some major cities to fight the COVID-19 epidemic.

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