THE RECESSION IN JAPAN AND ITS IMPACT ON THE GLOBAL ECONOMY

The world’s third-largest economy, Japan, fell into recession into the third week of May, with several countries of the world have initiated the opening up of their economies following the conclusion of nationwide lockdowns as a result of the receding COVID19 pandemic.

- JAY MANIYAR

The previous recession in Japan occurred in the second half of 2015, while this recession is seen, as per a Reuters article, to be the worst since the end of World War II. A recession is defined as “a period of an economic contraction, sometimes limited in scope or duration”, as per Dictionary. com. During a recession, an economy experiences massive job losses, impediments to the creation of new jobs, stunted growth in the Gross Domestic Product (GDP) – a key determinant of a country’s overall wealth, the slowdown in industrial growth, impact on bilateral and multilateral trade, and further accumulation of government debt. Among the other factors impacted by a recession include the losses faced to jobs held by foreign nationals, withdrawal of investments owing to poor prospects in returns, etc.

The impact of the recession on Japan’s economy

The recession is the commencement of a downturn in Japan’s economy (Japan’s GDP sank by 3.4 percent in the opening quarter of 2020), following the deadly impact of the SARS Cov-2 or the novel Coronavirus. The virus, so far, has claimed over 750 lives with cases continuing to mount at the time of writing of this article. Domestic cases notwithstanding, Japan has accrued a large number of cases and deaths from aboard the Diamond Princess cruise liner, a British cruise tourism ship that was docked in Yokohoma Port amidst the spread of the virus on-board following an infection of an 85-year old person.