World News

Japan to offer bleakest view on economy in over a decade as pandemic hits: Nikkei

By Leika Kihara

TOKYO (Reuters) – Japan’s government is expected to offer its bleakest assessment of the economy in over a decade in April as the coronavirus pandemic inflicts deeper pain on consumption and factory output, the Nikkei newspaper reported on Thursday.

The government last week declared a state of emergency in major population centres to combat the virus, urging citizens to stay at home and some facilities to shut down in a move likely to push the economy deeper into recession.

In its monthly report for April due on Friday, the government is likely to cut its assessment for the second straight month to say the economy is “worsening sharply,” the paper said without citing sources.

The last time the government described the economy as worsening was nearly 11 years ago, when the global financial crisis jolted financial markets and pushed Japan into recession, the Nikkei said.

The widening fallout from the pandemic has added woes to an economy already on the cusp of recession, with service-sector sentiment slumping to a historical low.

The government’s dismal assessment is likely to affect how the Bank of Japan describes the economic outlook when it meets for a rate review on April 27-28.

Sources have told Reuters the BOJ is likely to make a rare projection this month that the world’s third-largest economy will shrink in the current fiscal year that began in April, as the pandemic wreaks havoc on a fragile recovery.

Japan had 8,191 cases of infections of the coronavirus as of Wednesday, excluding those from a cruise ship quarantined in February, with 162 deaths, according to public broadcaster NHK.

(Reporting by Leika Kihara; Editing by Sandra Maler and Chizu Nomiyama)