Coronavirus pandemic sinks Japan’s household spending by record 11.1%

Japan’s average household spending dropped a record 11.1 per cent from a year earlier in April due to the coronavirus pandemic and a consumption tax increase last year, a government report showed on Friday.

Household spending stood at 267,922 yen (2,455 dollars) in April, which represented the seventh straight month of decline in the recession-hit country, according to the report issued by the Ministry of Internal Affairs and Communication.

“The novel coronavirus has caused a serious impact on the economy including consumer spending,” government spokesman Yoshihide Suga told a news conference.

Friday’s report is the latest to show how much the Japanese economy – the world’s third-largest – suffered from the pandemic.

The government said on Monday that Japan’s pre-tax corporate profits plunged 32 per cent year on year to 15.1 trillion yen in the first quarter of this year, the steepest fall in 10 and a half years.

Last week, Prime Minister Shinzo Abe’s government approved a second supplementary budget worth 31.9 trillion yen to help alleviate the fallout from the outbreak.

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The move comes one month after the enactment of the first extra budget worth 25.69 trillion yen, including a 100,000-yen cash handout to all residents in Japan.

However, critics say the handouts were not enough to help many small businesses and temporary and part-time workers that were hit hard by business closure requests made by the government.

Even before the pandemic, the Japanese economy took a big hit from the government’s consumption tax hike to 10 per cent from 8 per cent on Oct. 1.

Japan’s economy has fallen into a recession, as it contracted at an annualised rate of 3.4 per cent in the first quarter, marking two consecutive quarters of negative growth.

Abe’s government declared a state of emergency for seven urban prefectures in early April, requesting their residents stay at home to stem the spread of the coronavirus.

Nine days later, it was expanded to the whole country.

The government lifted the measure in five remaining prefectures last week, ending the nationwide restrictions. NAN

ibrandtv.com

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