Japan’s economy shrank more than expected in the first quarter as a slow vaccine rollout and new COVID-19 infections hit spending on items such as dining out and clothes, raising concerns the country would lag others emerging from the pandemic.
Capital expenditure also fell unexpectedly and export growth slowed sharply, a sign that the world’s third-largest economy is struggling for drivers to pull it out of the doldrums.
The reading and extended state-of-emergency curbs have heightened the risk that Japan might shrink again in this quarter and slide back into a recession, defined as two consecutive quarters of recession, some analysts say.
Photo: EPA-EFE
“Global chip shortages caused a marked slowdown in exports, putting a drag on capital spending as well,” SMBC Nikko Securities Inc chief market economist Yoshimasa Maruyama said. “Consumption will probably remain stagnant, raising risks of an economic contraction in the current quarter.”
The economy shrank an annualized 5.1 percent in the first quarter, more than the forecast 4.6 percent contraction and following an 11.6 percent jump in the previous quarter, government data showed yesterday.
The decline was mainly due to a 1.4 percent drop in private consumption, as state-of-emergency curbs to combat the pandemic hit spending for clothing and dining out.
The bigger-than-expected contraction reflected a surprise 1.4 percent drop in capital expenditure, which confounded market expectations for a 1.1 percent increase as companies scaled back spending on equipment for machinery and vehicles.
While exports grew 2.3 percent thanks to a rebound in global demand for vehicles and electronics, the pace of increase slowed sharply from the previous quarter’s 11.7 percent gain, a worrying sign for an economy still reeling from weak domestic demand.
Domestic demand knocked 1.1 percentage points off of its GDP, while net exports shaved off 0.2 percentage points, the data showed.
Despite massive monetary and fiscal stimulus, Japan’s economy slumped a record 4.6 percent in the fiscal year that ended in March, the data showed.
Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura blamed the weak GDP reading mainly on the curbs to combat the pandemic, adding that the economy still had “potential” to recover.
“It’s true that service spending will likely remain under pressure in April to June, but exports and output will benefit from a recovery in overseas growth,” he told reporters.
Japan’s economy expanded for two consecutive quarters after its worst post-war slump in the second quarter of last year, due to the initial hit from the pandemic.
The export-driven recovery came to a standstill as consumption took a hit from a spike in new virus strains that forced the government to reimpose curbs just 10 weeks before the Tokyo Olympic Games.
This time was supposed to be different. The memorychip sector, famous for its boom-and-bust cycles, had changed its ways. A combination of more disciplined management and new markets for its products — including 5G technology and cloud services — would ensure that companies delivered more predictable earnings. Yet, less than a year after memory companies made such pronouncements, the US$160 billion industry is suffering one of its worst routs ever. There is a glut of the chips sitting in warehouses, customers are cutting orders and product prices have plunged. “The chip industry thought that suppliers were going to have better control,” said
Enimmune Corp (安特羅生技) has obtained marketing approval from the Food and Drug Administration (FDA) for its EnVAX-A71 vaccine for enterovirus 71 (EV-71), becoming the nation’s first enterovirus vaccine completely made in Taiwan, it said yesterday. After spending 13 years and NT$1.5 billion (US$49.77 million) on the research and development of the vaccine, Enimmune plans to start manufacturing and marketing it by the end of March, the company said in a statement, without disclosing customer order figures. “It is possible that the vaccine would not be included in a national vaccination program initially, and consumers would need to pay for it themselves,” parent
Vaccine skeptics blocking transfusions for life-saving surgeries, Facebook groups inciting violence against doctors and a global search for unvaccinated donors — COVID-19 misinformation has bred a so-called “pure blood” movement. The movement spins anti-vaccine narratives focused on unfounded claims that receiving blood from people inoculated against COVID-19 “contaminates” the body. Some have advocated for blood banks that draw from “pure” unvaccinated people, while medics in North America say they have fielded requests from people demanding transfusions from donors who have not received a vaccine. In closed social media groups, vaccine skeptics — who brand themselves as “pure bloods” — promote violence against doctors
Asteroid mining start-up AstroForge Inc is planning to launch its first two missions to space this year as it seeks to extract and refine metals from deep space. The first launch, scheduled for April, is to test AstroForge’s technique for refining platinum from a sample of asteroid-like material. The second, planned for October, would scout for an asteroid near Earth to mine. The missions are part of AstroForge’s goal of refining platinum-group metals from asteroids, with the aim of bringing down the cost of mining these metals. It also hopes to reduce the massive amount of carbon emissions that stem from mining
RSS