Japan's economy has been hit by the worst economic fall in the course of 40 years, shrinking a record 7.8% in the April-June quarter, the worst contraction in the nation's modern history.
One of the major reasons is the global coronavirus pandemic that has forced to close businesses and buffeted consumer spending. The 7.8 per cent GDP equates to an annualised rate of 27.8 per cent, marking the biggest decline since comparable data became available in 1980, reported The Guardian.
There was a fall of 8.2 per cent in private consumption for the quarter, that accounts for more than half of the country's economy, as businesses across the country were shut down during a six-week national emergency in April and May. This was bigger than analysts' forecast of a 7.1 per cent drop.
Further, capital expenditure declined 1.5 per cent in the second quarter, less than the market forecast for a 4.2 per cent fall. Global trade also dried up, shaving three per cent of the GDP as the demands dampened.
"The lack of a 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," CNN Business quoted Doshisha University professor Noriko Ham as saying.
The current situation will build pressure on policymakers to take bolder steps to prevent the country's recession from deepening further. The world's third-largest economy entered into recession in the month of May and shrank 0.9 per cent in the January-to-March compared to the previous quarter.
Country's media reported the latest drop was the worst since World War II. But according to the government, comparable records began in 1980. The previous decline in the economy was during the global financial crisis of 2008-2009.