Amid fears of coronavirus impact, Japanese economy sinks
Looming fears about the economic damage expected from the new viral illness COVID-19
Oxbow Advisers managing partner Ted Oakley discusses the impact coronavirus is having on markets and how it could affect the U.S. economy going forward.
TOKYO (AP) — The Japanese economy shrank at an annual pace of 6.3% last quarter as growth was battered by typhoons and crimped consumer spending.
The seasonally adjusted economic data released Monday by the Cabinet Office comes amid looming fears about the economic damage expected from the new viral illness COVID-19 that began in China late last year.
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Japan's gross domestic product, or GDP, the sum of the value of a nation's products and services, slipped 1.6% in the last three months of 2019 quarter-on-quarter.
The annualized rate shows what the drop would have been if that same pace had continued for a year.
People wearing protective face masks cross a street in Tokyo, Monday, Feb. 17, 2020. Chinese authorities on Monday reported a slight upturn in new virus cases and hundred more deaths for a total of thousands since the outbreak began two months ago. (AP Photo/Koji Sasahara)
The quarantined ship Diamond Princess is pictured through barbed wire at Yokohama port in Yokohama, near Tokyo Monday, Feb. 17, 2020. Japanese officials have confirmed 99 more people infected by the new virus aboard the ship, the Health Ministry said Monday. (Mayuko Isobe/Kyodo News via AP)
Buses arrive at a port as the Japan Self-Defense Forces prepare to move American passengers from the quarantined Diamond Princess cruise ship Sunday, Feb. 16, 2020, at Yokohama Port, near Tokyo. The U.S. says Americans aboard a quarantined ship will be flown back home on a chartered flight Sunday, but that they will face another two-week quarantine. (AP Photo/Jae C. Hong)
The contraction for the October-December period was the first Japan had in more than a year. The amount of decline was the worst in about five years.
The news sent the Nikkei 225 benchmark stock index falling in trading Monday.
Domestic demand fell in the quarter at an annual pace of 8.0%.
Hurting people's spending was the rise in the consumption tax from 8% to 10% in October.
Both exports and imports fell during the quarter.
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The new viral illness is likely to affect various aspects of the economy.
Japan had been counting on Chinese tourists in recent years to sustain growth, but visits have dwindled to a trickle.
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Japanese companies have halted or adjusted production, because of supply chain disruptions or work suspensions at their own factories in China.
Overall consumption is likely to drop as people avoid crowds.
"The concerns for the export focused economy is continued pressure amid the coronavirus," said Jingyi Pan, market strategist at IG in Singapore of Japan's GDP.