Hong Kong (CNN Business)Japan just reported its worst GDP on record as the ongoing Covid-19 outbreak dented consumption.
The world’s third-largest economy shrank 7.8% in the second quarter compared with the previous quarter, the country’s Cabinet Office said on Monday. That translated to an annual rate of decline of 27.8%, the worst since modern records started in 1980 and the third consecutive quarter of contraction.Consumption, which accounts for more than half of Japan’s economy, slumped 8.2% for the quarter as businesses across the country shuttered during a six-week national emergency in April and May.External demand shaved three percentage points off GDP on the quarter as global trade dried up.Japan's job-for-life culture has survived war, earthquakes and now a pandemic“The lack of coherent policy response is really frightening. We need a wise, cautious and broad response to this terrible situation. It is exactly what [Prime Minister] Abe and Company lack when it comes to the way they are going about things,” said Noriko Hama, a professor at Doshisha Business School — part of Doshisha University.Read MoreThe Japanese government went ahead with a subsidized plan to boost domestic travel in mid-July, just as new virus cases started to surge. Japan has logged more than 19,000 new virus cases in August alone, which is about a third of the total number of infections Japan has recorded during the entire pandemic.Many economists warn that numerous relief measures adopted in two economic stimulus packages earlier this year will expire in September, posing a risk to the small- and medium-sized enterprises that comprise the bulk of Japan’s economy.Japan has recorded 55,426 confirmed coronavirus cases and 1,101 virus-related deaths, the Japanese Ministry of Health, Labor and Welfare announced on Monday.