Japanese Economy Sees Decline
The Japanese economy has completed itself on a higher side for the period published on Friday from January to March. Japan’s gross domestic product (GDP) contractually by 0.2% compared to the previous quarter, the first quarterly decline since the January-March period in 2024.
Economic Performance
Compared to the same quarter in the previous year, however, the Japanese economy shrank by 0.7% – much steeper than the forecast of 0.2%. The decline was largely due to an export decrease that drives the Japanese economy. The data show that the demand for exports was still decreasing before US President Donald Trump announced extensive tariffs.
Impact of Tariffs
The United States imposed a 24% tariff on April 2, and cars were imposed on an additional 25% tax. The United States is the largest market for the Japanese auto industry. After exhaustion, the tariffs will come into force in July, unless Japan can negotiate a deal. The uncertainty is significantly reinforced by the Trump tariffs, and it is likely that the economic slowdown trend will be in advance.
Economic Challenges
The Japanese economy has been vulnerable for some time because an aging population balloons restricts welfare expenditure, but work and demand. The Japanese central bank had long maintained a policy of negative interest rates to strengthen the economy, but began to gradually increase interest rates last year. Japan’s economy is missing a growth driver in view of the weakness in exports and consumption.
Possibility of Recession
The data can lead to growing demands for larger budget expenses. The possibility that the economy will enter a recession cannot be excluded, depending on the degree of downward pressure caused by the tariff problem. Tokyo tried to negotiate a trade agreement with the USA, but the political decision-makers recognized that it was difficult to plan an answer because Trump keeps changing his opinion.
