Japan’s economy has further weakened in May in many sectors as consumption has gone down owing to extended state of emergency in the country because of increasing COVID-19 cases, a government report said.
The slowdown began in April, which continued in May as well. Private consumption has fallen, the report. The third emergency for Tokyo, Osaka was initially supposed to be called-off on May 11, but was extended. The country may extend the emergency until June.
Consumption in the country started falling from later half of April. Exports grew marginally while in April they increased at a slower pace.
Production index in March rose 3.4pc compared to the prior year according to government data released on May 19. Production capacity on the contrary slipped 1.2pc in March from the previous year.
Japan’s GDP for fiscal year ending March contracted by 4.6pc. January-March (Q4) was weak, marking a annualized contraction of 5.1pc from the prior year period owing to the second state of emergency. COVID-19 Cases in Japan started rising since November last year and state of emergency was announced for Tokyo metropolitan area in January.
Shortage of semiconductor chips has led to a disruptive supply chain in Japan. Major manufacturers had to slash production. Auto manufacturer Nissan Motor Co. stated that lack of chips could lead to a reduction in output by half a million units. Subaru Corp said it is likely to cut production by 48,000 vehicles this year. Reports released early May project chip supply shortage to continue until June 2022, while demand for auto semiconductors is expected to increase in the coming years.