The world’s one of the largest economies in the world suffered losses due to the coronavirus pandemic. Importantly, Japan’s exports posted a double-digit slump for a sixth straight month in August. As a reminder, U.S. bound shipments declined due to a global demand slowdown caused by the pandemic. Japan is not the only country that is struggling to cope with the economic impact of the pandemic. New Zealand fell into its worst recession in years.
It is worth noting that, the prime minister will have to tackle multiple challenges. Yoshihide Suga became the prime minister on September 16. He replaced the country’s long-serving prime minister Shinzo Abe. It won’t be easy for him to get the economy back on track.
Notably, total exports dropped 14.8% year-on-year in August. Consequently, Japan’s exports fell for their 21st straight month. It is the worst result in decades. In July, total exports fell 19.2%.
People should keep in mind that, the decline in August was driven by fewer shipments of cars and mineral fuels. Hopefully, the pace of contraction eased somewhat in July.
Importantly, strong demand for information and communications technology (ICT Technology) linked to working from home resulted in exports electronic machinery only falling 5.5% year-on-year.
The economy posted its worst postwar contraction in the second quarter. Moreover, export volumes may not reach pre-virus levels until early 2022. It is no secret that the United States is Japan’s key market. Notably, shipments to the key market fell 23.1% in the year to August.
However, exports to China rose 5.1% year-on-year in August. China is Japan’s largest trading partner. Exports increased thanks to semiconductors.
Nevertheless, exports to the rest of Asia fell 7.8% due to shrinking exports of iron and steel products.
New Zealand and its economy
As mentioned above, New Zealand is also struggling to deal with problems. The country’s gross domestic product (GDP) shrank by 12.2% between April and June. Importantly, it is the country’s first recession since the global financial crisis. This is not the end of the story, it also the worst recession since 1987. The current system of measurement dates back to 1987.
Nevertheless, the government hopes its pandemic response will lead to a quick recovery. Interestingly, New Zealand was briefly declared virus-free. However, it still has a handful of cases.
The state of the local economy has the potential to influence politics. It is not surprising as people want to know, how the government plans to deal with the ongoing situation. Industries like retail, accommodation, restaurant, and transport suffered heavy losses.
Hopefully, some economists are also predicting a swift recovery, because of New Zealand’s strong response to the virus. Moreover, they expect a record-breaking rise in the September quarter.
However, Treasury forecasts released on September 16 suggested massive debt, as well as continuing disruptions, are likely to delay full recovery.
Governments around the world implemented various restrictions to limit the spread of the virus. Companies are struggling to stay afloat and it won’t be easy to adjust to the new reality.