Japan's GDP set for biggest drop since 2014 – Bloomberg
|Japan's economy likely suffered its biggest contraction since 2014 at the end of the last year and could drop into recession in the first quarter of 2020 due to coronavirus outbreak.
The gross domestic product (GDP) growth rate is forecasted to have contracted by 3.8% in the fourth quarter of 2019 mainly due to a sharp drop in consumer spending.
Economists estimate that consumer expenditure fell 7.8% in the fourth quarter, alongside declines in business investment and exports, according to Bloomberg.
Consumers may have tightened their purse strings in response to the consumption tax hike. Japan increased its consumption tax from 8% to 10% in October, the first hike in five years in October.
“Japan’s underlying economy isn’t on a firm footing to start with, so growth can be easily pushed into negative territory if something like the coronavirus happens,” said Hiroshi Miyazaki, an economist at Mitsubishi UFJ Morgan Securities.
A negative GDP print for the first quarter would confirm recession – negative growth rate for two consecutive quarters or more.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.