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Japan’s economy fell to recession in Q1 – MarketWatch

TOKYO–Japan’s economy contracted an annualized 2.2% in the January-March quarter, government data showed Monday, confirming a recession due to the impact of the coronavirus pandemic.

The revised figure was less than the 3.4% contraction in a preliminary estimate from the Cabinet Office in May. Two straight quarters of contraction is one definition of a recession.

The revised data showed that private consumption declined 0.8% from the previous quarter, compared with an initial estimate of a 0.7% fall.

Meanwhile, capital investment rose 1.9%, stronger than the initial estimate of a 0.5% decrease.

Economists say the upward revision to capital expenditure may not accurately reflect the impact of the pandemic because many companies didn’t submit their plans by the deadline.

Those who were unable to reply are likely to be affected more seriously by the virus, they say.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

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Economy Japan's

Japan’s economy falls into recession in Q1 – MarketWatch

TOKYO — Japan’s economy fell into a recession by one common definition in the first quarter of 2020, with worse expected in the current quarter.

The world’s third-largest economy after the U.S. and China shrank an annualized 3.4% in the January-March period, following a 7.3% contraction in the previous quarter when the national sales tax rose to 10% from 8%. Two straight quarters of contraction is one definition of a recession.

Economists polled by data provider Quick had expected a 4.8% annualized contraction in the quarter.

The coronavirus pandemic pushed down spending by households and companies and kept tourists away. Private consumption fell 0.7% on quarter as people refrained from leisure and dining out to avoid infection. Capital expenditures by companies dropped 0.5%.

Economists expect that the economy shrank at an annualized pace of 20% or more in the current quarter. Prime Minister Shinzo Abe declared a national state of emergency in April, which led many stores and restaurants to close. Most foreign visitors are barred from entering the country` and domestic travel has mostly stopped.

Last week Mr. Abe lifted the state of emergency in 39 of 47 prefectures. It still applies in Tokyo and Osaka but is expected to end nationwide in the next week or two.

“Sharp declines in private consumption, housing investment and capital spending are inevitable after April due to the state of emergency and the subsequent request for closing businesses,” said Taro Saito, an economist at NLI Research Institute.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

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