02.17.20 - Japan's economy shrank at the fastest rate since 2014, as it was hit by a sales tax rise, a major typhoon and weak global demand. Gross domestic product (GDP) dropped by a much steeper than expected 6.3% at the end of 2019.
There have also been concerns over the coronavirus outbreak and if that will contribute to a further economic slump this quarter. Many fear that Japan, the world’s third largest economy, is slipping into a recession.
During this tough period, consumer spending in Japan has fallen by almost 3% after its sales tax was initiated in October of last year, and in that same month Typhoon Hagibis hit large parts of the country.
Investors are waiting to see if the economy can rebound from these blowbacks. The Japanese economy minister stated that the government was ready to take any necessary steps to mitigate the impact of the coronavirus outbreak on the economy and tourism.
At the end of 2019, Prime Minister Shinzo Abe approved $120 billion in spending aimed at trying to mitigate the impact of the sales tax hike. The drop in GDP was the first in over a year and certainly the largest in the past 5 years.
