Pandemic sets Japan on course for a deep recession as spending and services plunge in the world’s third-largest economy by LeikaKihara
TOKYO - Japan’s household spending plunged in March and service-sector activity shrank at a record pace in April, reinforcing expectations that the coronavirus pandemic is tipping the world’s third-largest economy into deep recession.
The weak readings make it a near certainty the economy suffered a second straight quarter of contraction in January-March, the technical definition of a recession, and was on track for a deeper decline in the current quarter as the health crisis kept shoppers home and businesses closed. Household spending slumped 6.0% in March from a year earlier following a 0.3% fall in February, marking the biggest drop in five years, government data showed on Friday.
Spending on pasta jumped 44% as people cooked at home more often, while purchases of gaming consoles more than doubled as school closures kept children housebound. However, those increases were not enough to make up for the plunging demand for other items.The data will likely drag on preliminary first-quarter gross domestic product data due on May 18.
Inflation-adjusted real wages fell in March for the first time in three months as overtime pay slumped 4.1% from a year earlier, falling at the fastest pace on record.
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