US-China conflict expected to negatively affect japan’s economy

Pandemic to hit Japan's economy more than expected

Analysts predict Japan’s economy will shrink more than previously expected and suffer mild reduction during the current fiscal year .

Analysts also see revived, increasing tensions between the United States and China as an additional source of concern for the world’s third-largest economy, which is heavily reliant on exports.

Read also – March 2021 Japan’s economy will shrink to 4.7%

Taro Saito an executive research fellow at NLI Research Institute said to prevent the spread of the corona virus the Economic activity will continue to face restrictions from social distancing measures.

He said Japan’s economy will likely kick back next fiscal year but won’t recoup the huge losses incurred this year.

The poll of 32 economist showed that the economy contraction projected more than 5.3% in the last month. The forecast shows that the economy can shrink to 5.6% in the current fiscal year to next march.In a worst case scenario it will shrink 8.0%.

Read also – Pandemic heightens chance Japan slides back into deflation: Reuters poll

The downgrade came as many analysts revised their forecasts for April-June gross domestic product (GDP) to a 27% contraction – last month’s worst case forecast – from a nearly 24% drop projected in July.

Mari Iwashita , Chief market economist at Daiwa securities said , Governments and central banks can’t end steps to combat the pandemic until an effective vaccine becomes available. The battle against the coronavirus will be a long one.

A recent sharp deterioration in U.S.-China relations could complicate the outlook, as the world’s two largest economies disagree on issues such as trade, technology and the pandemic.

About 90% of economists surveyed said that the conflict between the two nations will affect Japan’s economy and it would have a negative impact.

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