Japan likely heading into technical recession due to coronavirus impact – Barclays

According to Barclays analysts led by Tetsufumi Yamakawa in Tokyo, there is an increasing chance the Japanese economy could head in to a technical recession mainly due to the negative impact of the coronavirus (Covid-19).

Key Quotes:

“Japanese real GDP contracted 3.2% on a quarterly basis, a little better than market consensus of -3.8%.

This is all pre-coronavirus and mostly due to domestic tax matters.

There is an increasing risk in first quarter weakness due to the Covid-19 impacts, and if that leads to negative growth, and it could, Japan hits a technical recession with back to back contraction.

Weaker China tourism and a decrease in trade with China is a huge headwind for Japan.

The probability of a recession there has surged to 69%.”