Japan’s Economy May See a Record 25% Shrinkage

JCER Senior Researcher Jun Saito recently commented that the global epidemic may be the final blow on Japan’s sluggish economy, while Goldman Sachs estimated Japan’s economy may see a record 25% shrinkage this quarter.

Jun Saito repeated the point that Japan is heading towards a severe recession, attributing it to the shocks on demand and supply. In addition, the delaying of Olympics and Paralympics will “put more downward pressure” on Japan’s economy.

According to the estimation of Goldman Sachs, Japan’s economy will shrink an unprecedented 25% this quarter despite a stimulus scheme never seen in history. While coronavirus outbreak in the US and some European economies is easing, this may not be a very good news for the safe-haven yen, which has benefited from the continuous global economic slump in March. Now that the market expects a peak of global coronavirus cases, risk aversion sentiment is eventually thinning, which will definitely weigh on the yen.