Tokyo, Japan—Japanese growth figures were better than initially feared in the first quarter, according to official data published on Monday, but the world’s third-top economy was still mired deep in recession.
Gross domestic product contracted by 0.6 percent in the January-March period compared to the previous quarter. Authorities had initially reported a 0.9-percent contraction.
Economists had expected the revision, with the market forecasting a 0.5-percent contraction.
The figures confirmed that Japan was suffering its first recession—defined as two consecutive quarters of contraction—since 2015.
A tax hike and typhoons hit Japan hard in the fourth quarter of 2019, sparking a 1.9-percent contraction compared to the previous period—even before the coronavirus pandemic battered the economy both in Japan and worldwide.
Japan has been hit less hard than most advanced economies by the coronavirus, with just over 17,000 cases in the whole country and around 900 deaths.
However, authorities urged people to stay indoors for several weeks at the height of the outbreak in Japan, which affected the capital and economic powerhouse Tokyo the most.
Most analysts believe that Japan’s economy will suffer further in the coming months as the effects of the restrictions on economic activity feed into the figures.
Japan’s household spending, meanwhile, recorded its worst drop in nearly two decades in April, government data showed Friday, as the world’s third-largest economy reels from the impact of the coronavirus pandemic.
Spending fell 11.1 percent from a year earlier, with a sales tax hike last year adding to woes, according to data released by the internal affairs ministry.
The figure was largely in line with market expectations of a 12.75-percent drop, and marked the seventh straight month of declines since the government hiked the sales tax in October.
“The new coronavirus is having a serious impact on the economy including spending by individuals,” chief cabinet secretary Yoshihide Suga told reporters at a regular briefing.
“We think it is necessary for us to return to regular economic activities step by step while taking counter-infection measures, as businesses are trying to survive the current situation,” added Suga, the top government spokesman.
The April drop was partly attributed to declines in spending on transport and telecommunications, as well as on leisure activities.
It is the worst decline since comparable data became available in 2001.
The latest figures come after official data last month confirmed Japan dived into its first recession since 2015, shrinking by 0.9 percent in January-March as it wrestles with the fallout from the coronavirus.
The drop in gross domestic product followed a 1.9 percent decline in the fourth quarter of 2019 as the tax hike and typhoons hit Japan hard—even before the pandemic shut down much of the economy.
Fears about the economic impact of the virus have shaken global and Japanese financial markets, and the Bank of Japan last month expanded its emergency monetary easing and cut growth forecasts for the country.
Compared with hard-hit areas in Europe, the United States, Russia and Brazil, Japan has been spared the worst of the pandemic, with 17,064 infections and 907 deaths.