Japan’s economy falls in fourth quarter, recession risks grow

Japan’s economy fell to its fastest pace in six years, caused by a sales tax hike that hit business and consumer spending, worsening an outlook already affected by the virus outbreak.

Analysts say that the epidemic could weaken growth in the current quarter and thrust Japan into recession.

Japan GDP fell 6.3% in the final quarter of 2019, as showed by government data. This was faster than a 3.7% drop in median forecast.

Capital expenditure dropped 3.7% in the fourth quarter, faster than a median forecast of 1.6% drop.

Domestic demand cut 2.1% off GDP growth. The fall in capital expenditure cast doubt on Japan’s growth outlook, even when domestic demand makes up for exports.

Policymakers warned a contraction in the economy in October-December. Concerns on the virus outbreak caused a gloomy mood in Japanese manufacturers.

The Bank of Japan steadied monetary policy and pushed economic growth estimates, hoping a recovery in global growth to take place amid easing risks.