TOKYO, July 3 (Xinhua) -- The Japanese economy will see some improvement thanks to the government's massive stimulus program, but in the long run the recovery is likely to be slow due to a number of factors, experts here have said.
Since the COVID-19 epidemic swept the world, the Japanese economy has been hit hard in the first half of this year with all indicators declining.
Personal consumption, which accounts for more than half of Japan's economy, fell for the seventh consecutive month in April compared to a year earlier. Real household consumption plunged 11.1 percent in April from a year earlier, the biggest drop since comparable data became available, according to statistics released by the Ministry of Internal Affairs and Communications in June.
Core machinery orders, a leading indicator of private investment in equipment, fell 12 percent in April from a month earlier, far surpassing the 0.4-percent drop in March and exceeding market expectations, according to data released by the Cabinet Office in June.
Japan's industrial and mining production index decreased 8.4 percent in May from a month earlier to 79.1, hitting a new low, according to preliminary statistics released by the Ministry of Economy, Trade and Industry (METI) on Tuesday. So far, Japan's industrial and mining production has declined for four consecutive months.
Japan's exports of cars and auto parts, the country's most important export industry, have been sharply affected as the spread of the coronavirus has greatly reduced demand, leading to sharp drops in Japan's exports since March. Exports fell 28.3 percent in May from a year earlier, the biggest drop since September 2009. So far, Japan's exports have fallen for 18 months in a row.
The Bank of Japan (BOJ)'s short-term economic survey for the second quarter of this year released on Wednesday showed a continued sharp deterioration in business sentiment after the previous quarter. The index of sentiment among large manufacturers fell to minus 34 from minus eight in the previous quarter, the lowest since the second quarter of 2009.
The number of bankrupt companies in Japan has increased rapidly, and the trend of not hiring non-regular employees in various industries has intensified while the employment environment has deteriorated. Surveys have showed bankruptcies rose 15 percent in April from a year earlier, the eighth straight month of increase. Japan's unemployment rate increased for the third month in a row in May.
As the economy continues to slide, Japan's core consumer price index has fallen for two consecutive months since April, accumulating deflationary pressure.
Haruhiko Kuroda, governor of the BOJ, said the economy is expected to shrink considerably in the second quarter. The International Monetary Fund's latest World Economic Outlook also forecast that Japan's economy will shrink by 5.8 percent this year.
However, the pace of deterioration slowed as the full lifting of Japan's state of emergency on May 25 and the government's massive stimulus package began to take effect.
The number of bankruptcies in Japan fell sharply in May, according to the Tokyo Chamber of Commerce and Industry. Japan's economy may have bottomed out between late April and early May after a sharp downturn, the Daiwa Institute of Economic Research said in a report.
A BOJ survey also showed a pick-up in sentiment among Japan's biggest companies as they look ahead to the third quarter. BOJ officials said they believed Japan's "economy has bottomed out and will start to recover."
Japan's manufacturing production forecast index, released by the METI on Tuesday, is expected to have risen 5.7 percent month-on-month in June, compared to a forecast of 9.2-percent increase in July.
As for the future direction of Japan's economy, Takeshi Minami, a researcher at Norinchukin Research Institute, said he believes that the global economic recovery is very slow and it may take quite a long time for Japan's economy to return to the pre-epidemic level. It is expected that the economic situation in the second half of the fiscal year of April 2020 to March 2021 in Japan will remain severe, he said.
A report by the Daiwa Institute of Research also said that although the Japanese economy will recover briefly with the end of the state of emergency and the impact of economic stimulus policies, the sluggish consumption will continue and the economy is likely to enter a very slow recovery phase. Enditem
