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- Japan double-dip recession risk looms with new virus emergency
Japan double-dip recession risk looms with new virus emergency
Bloomberg reports that according to economists, a new state of emergency in Japan could trigger a double-dip recession if the tougher restrictions fail to curb infections or if they are prolonged.
Tokyo and three other prefectures that roughly account for a third of the economy are set to enter the state of emergency from Sunday, little more than a month after an earlier emergency was finally lifted in the capital.
“Forget a V-shaped recovery,” economists at Daiwa Institute of Research wrote in a report. “The April to June quarter could see another three months of negative growth.”
So far economists are still expecting the economy to eke out growth this quarter as they scramble to revise their forecasts, having previously projected a firm rebound. But that outlook could quickly head further south if the emergency orders are extended beyond the currently planned May 11.
Daiwa’s Kanda calculates that the emergency call in the four prefectures will slice 600 billion yen ($5.56 billion) off the economy in a month. If the orders are expanded nationwide, the hit will amount to 1.6 trillion yen, he wrote.
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