Japan’s economy shrank at annual rate of 27.8% in April-June, the worst contraction on record, as the coronavirus pandemic slammed consumption and trade, according to government data released Monday.
The Cabinet Office reported that Japan’s preliminary seasonally adjusted real gross domestic product, or GDP, the sum of a nation’s goods and services, fell 7.8% quarter on quarter.
The annual rate shows what the number would have been if continued for a year.
Japanese media reported the latest drop was the worst since World War II. But the Cabinet Office said comparable records began in 1980. The previous worst contraction was during the global financial crisis of 2008-2009.
The world’s third largest economy was already ailing when the virus outbreak struck late last year. The fallout has since gradually worsened both in COVID-19 cases and social distancing restrictions.
The economy shrank 0.6% in the January-March period, and contracted 1.8% in the October-November period last year, meaning that Japan slipped into recession in the first quarter of this year. Recession is generally defined as two consecutive quarters of contraction.
Japanese economic growth was flat in July-September. Growth was modest in the quarter before that.
For the April-June period, Japan’s exports dropped at a whopping annual rate of 56%, while private consumption dipped at an annual rate of nearly 29%.
That was without any full shutdown of businesses to contain coronavirus outbreaks, which have worsened in the past month, pushing the total number of confirmed cases to over 56,000.
Analysts say the economy is expected to recover gradually, once the impact of the pandemic is curbed. Japan’s export-dependent economy relies heavily on growth in China, where outbreaks of the novel coronavirus began and have since subsided. But demand has remained subdued.
Development of a vaccine or medical treatment for COVID-19 would also help, but prospects for such breakthroughs are unclear.
Since GDP measures what the economy did compared to the previous quarter, such a deep contraction will likely be followed by a rebound, unless conditions deteriorate further.
That doesn’t necessarily mean the economy will return to pre-pandemic levels. Some experts doubt air travel and other sectors will ever fully recover.
On the other hand, some companies have reaped the rewards of people staying at home, such as the Japanese video-game maker Nintendo Co., whose recent profits have boomed.
Trudeau Poised to Announce Three-Pillar Economic Recovery Plan – Yahoo Canada Finance
(Bloomberg) — Prime Minister Justin Trudeau is set to unveil a new plan to try to contain the spread of Covid-19 and recharge Canada’s pandemic-battered economy, according to a senior government official.
The broad themes in this week’s so-called Throne Speech — which outlines his government’s priorities — will be a focus on the immediate task of tackling the coronavirus, a medium-term commitment to support Canadians through the pandemic and a “resiliency agenda” to spur recovery and reconstruction.
Trudeau’s agenda won’t establish budget targets, which will be left for Finance Minister Chrystia Freeland to detail later this year in a fiscal update, the official said, speaking on condition they not be identified because the document isn’t yet public.
Wednesday’s speech is one of the most anticipated in Trudeau’s five years in power, with questions mounting over how his governing Liberals plan to navigate their next policy steps amid surging Covid-19 case numbers and soaring budget deficits.
The prime minister needs to balance the need for more health-care spending with pledges to engineer an ambitious and green post-pandemic agenda. And he needs to do it without further eroding the nation’s financial credibility after one major credit-rating agency downgraded Canada’s debt.
“This government has set certain expectations and now the pressure is on them to meet their own expectations,” pollster Shachi Kurl, executive director of the Angus Reid Institute, said by phone.
Health care spending will be the first pillar for the economic recovery, the official said. This includes spending for vaccines, Covid-19 testing and support to localize outbreaks to maintain control over a resurgence of cases.
The second will be a pledge to provide financial support to Canadians who are struggling economically due to the pandemic, with a focus on shifting people back into the workforce.
Economic recovery and reconstruction efforts are the third pillar. This will include a pledge to help foster green investments, resolve major health issues such as long-term care for seniors and bolster support systems for the most vulnerable, like low-income women and minorities.
Trudeau has spoken publicly about plans to overhaul the employment insurance system, provide support for childcare and long-term care and build a cleaner economy through climate initiatives like retrofitting buildings and electric vehicles.
The prime minister suspended all parliamentary business last month after a public rift with his previous finance chief prompted Freeland’s appointment, claiming he needed a new legislative slate in order to move ahead with a “bold” new spending plan to help drive the recovery.
Canada has already budgeted C$380 billion ($289 billion) in new debt this year as a response to the downturn, spending that will likely drive the federal government’s debt to about 50% of economic output, from 31% last year. That’s triggered a backlash from business groups and economists, who are calling on Trudeau to commit to specific new debt targets to impose discipline on the budgeting process.
To assuage those concerns, Freeland vowed last week to preserve Canada’s reputation for sound fiscal management as her government considers the next steps to drive the recovery.
Trudeau is prepared to spend whatever it takes to combat the immediate impacts of Covid-19, given the emergency expenditures will only be temporary, the official said. Any future spending deemed structural, however, would be within new “fiscal tracks” that will be laid out by the finance minister later this year.
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Swedish government promises $12 billion to kick-start economy in 2021 budget – The Journal Pioneer
By Simon Johnson
STOCKHOLM (Reuters) – Sweden’s government will pump 105 billion crowns ($12 billion) into the economy in 2021 through tax cuts and spending in a record giveaway aimed at getting the economy back on its feet after the coronavirus pandemic-induced slump.
Sweden’s economy will shrink around 4.6% this year, the minority coalition said its budget on Monday, a milder hit than many other European countries, some of which are being forced to re-impose COVID restrictions after a surge in new cases.
“Economic policy is going into a new phase,” Finance Minister Magdalena Andersson told reporters. “It is about a record-large budget to restart the Swedish economy: 100 billion so that we can work our way out of the crisis.”
The Social Democrat and Green coalition said the budget would focus would be on boosting jobs, welfare and supporting the switch to a carbon-free future.
Most measures, agreed with two small, centre-right parties which help keep the coalition in power, were already known.
Individuals and companies will get a tax cut and local authorities and welfare services more cash while around 10 billion crowns will go toward fighting climate change.
The budget is expected to create around 75,000 jobs.
LONG TERM WINNERS
While Sweden looks to have got off relatively lightly economically in the short term, analysts caution that it is too early to pick the longer term winners and losers from the pandemic.
Much will depend on how government largesse, including Europe’s 750 billion euro recovery find, is spent.
Sweden also faces a number of structural challenges, not least in the labour market where unemployment among young people and immigrants is uncomfortably high.
A dysfunctional housing market also threatens long-term economic stability while funding the country’s comprehensive welfare model as society as a whole ages will require a huge increase in productivity.
The government has promised to keep the taps open, at least for the next few years – tax cuts and spending will boost the economy by 85 billion in 2022.
But with a general election due that year, longer term policies remain unclear. The last national vote resulted an a virtual stalemate between the centre-left and centre-right blocs and there is little evidence that voters are any clearer about what they want now.
(Reporting by Simon Johnson, additional reporting by Johan Ahlander; Editing by Niklas Pollard and Toby Chopra)
US household wealth hits record even as economy struggles – CKPGToday.ca
Sep 21, 2020 9:07 AM
WASHINGTON — Americans’ household wealth rebounded last quarter to a record high as the stock market quickly recovered from a pandemic-induced plunge in March. Yet the gains flowed mainly to the most affluent households even as tens of millions of people endured job losses and shrunken incomes.
The Federal Reserve said Monday that American households’ net worth jumped nearly 7% in the April-June quarter to $119 trillion. That figure had sunk to $111.3 trillion in the first quarter, when the coronavirus battered the economy and sent stock prices tumbling.
Since then, the S&P 500 stock index has regained its record high before losing some ground this month. It was up 2.8% for this year as of Friday. The tech-heavy Nasdaq has soared more than 20% this year.
The full recovery of wealth even while the economy has recovered only about half the jobs lost to the pandemic recession underscores what many economists see as America’s widening economic inequality. Data compiled by Opportunity Insights, a research group, show that the highest-paying one-third of jobs have almost fully recovered from the recession, while the lowest-paying one-third of jobs remain 16% below pre-pandemic levels.
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