Coronavirus pushes Japan into recession

Instruments to trade: USD/JPY, CAD/JPY, AUD/JPY

Coronavirus pushes to recession countries one by one. This time it gets to Japan, known as one of the world’s hardest working nation.

Soft lockdown in Japan

As coronavirus cases surged in the country, Prime Minister Shinzo Abe declared the state of emergency in the largest population centers that make up almost 50% of GDP, according to Bloomberg.

In fact, the lockdown isn’t as strict in Japan as in other countries today, it’s just a request to stay at home and close businesses, not an order. So, perhaps the downturn of economic activity won’t be so extreme. However, according to Japan economists, people will take it seriously this time.

Government measures

Moreover, Japan Prime Minister will rescue the country’s economy by almost 1 trillion US dollars stimulus package equal to 20% of Japan's economic output. It’s more than double the amount Japan spent following the crisis in 2008.

Forecast

Many economists believe that Japan has already fallen into recession because of export declines, supply-chain disruptions and travel bans. There are fears that economy is going to shrink close to 20% in a lockdown.

As we could notice, if coronavirus cases rise, the stock market volatility rises too. As a result, Japanese yen may lose its safe-heaven status.

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Kseniia Medik

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