Japanese economy shrinks as energy prices soar | Health, Medicine and Fitness
By YURI KAGEYAMA – AP Business Writer
TOKYO (AP) — Japan’s economy contracted at a worse-than-expected 1% annual rate in the first quarter as rising prices and COVID-19-related restrictions undermined spending and investment, according to data released Wednesday.
Japan’s real gross domestic product, or GDP, the sum of the value of a country’s goods and services, contracted 0.2% in January-March from the previous quarter, the Cabinet Office said.
The world’s third-largest economy managed modest growth in the final quarter of last year, but the economy sank the previous quarter.
Russia’s war in Ukraine has pushed already high energy prices even higher, a big downside for resource-poor Japan. The Japanese yen weakened, trading at around 130 yen to the dollar, making imports relatively more expensive.
Japan has never had a lockdown, but has periodically imposed restrictions on businesses, mostly asking restaurants and bars to close early to curb the spread of the coronavirus pandemic. The last such restrictions ended in March.
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Some medical experts say the country has seen an increase in COVID-19 cases since then, due to the more contagious omicron variant. Japan has so far recorded about 30,000 COVID-19 related deaths.
The reintroduction of restrictions to curb the spread of infections and the impact of inflation weighing on household purchasing power are dragging growth down, analysts say.
But some expect an economic rebound in the coming months.
“After a dismal start to the year, we believe the economy will rebound this quarter on the back of a recovery in consumer spending, particularly in services, following the full lifting of COVID-19 restrictions in Japan,” said Takayuki Toji, Economist at SuMi TRUST.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama
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