Japan’s to-be-elected prime minister will reportedly be having the daunting task of averting the worst economic downturn of the Japanese economy hit by the coronavirus pandemic. Several other factors, comprising the falling wages and household spending, have been posing another challenge to the economy following the lifting of lockdown measures in the month of May.
While Yoshihide Suga, the Chief Cabinet Secretary and the frontrunner for becoming the next premier, has highlighted his readiness to augment spending if he were to head the country, Koichi Fujishiro, an economist at Dai-ichi Life Research Institute, has clarified that the risk ahead is that the impact of measures taken till date comprising payouts to households will wane out.
According to sources, the Japanese economy has witnessed a decline of over 27.8 per cent in preliminary reading, followed from the annualized reading of 28.1 per cent during April-June. This scenario is expected to put the newly elected prime minister under pressure for taking up bolder measures that furnish robust economic support to the country.
While Japan has lately witnessed a renewed rise in infections but has, however, been spared from the kind of big casualties evident in western countries, the economy has recently witnessed a 4.7 per cent drop in capital expenditure which was much greater than a preliminary fall of 1.5 per cent, suggesting that the pandemic was responsible for hitting extensive sectors of the economy.
The Japanese economy has also depicted some signs of movement following the suffering of three consecutive quarters of contraction. The factory output has, however, shown escalation in July at the fastest pace on record owing to the rebounding automobile demand. Irrespective of the fact, another set of data reveals that any possible recovery is expected to be modest, given the fall of over 7.6 per cent in the household spending in July year-on-year.