TOKYO (Reuters) – A key economic indicator in Japan fell at the fastest pace since 2011 in March and the government warned of a deep recession as the coronavirus crisis takes a heavy toll on business activity and consumer spending.
In Tuesday’s coincident indicator index report, the government maintained its view that the economy was “worsening” in March, backing other data during that month and in April which paint a bleak outlook.
The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales, dropped a preliminary 4.9 points to 90.5 in March from the previous month, the Cabinet Office said.
It was the fastest pace of decline since March 2011 when a devastating earthquake, tsunami and nuclear disaster hit Japan.
Japanese Economy Minister Yasutoshi Nishimura said that the data will likely deteriorate further in April as a state of emergency was declared last month to halt the spread of coronavirus infections.
“The coincident indicator index is expected to continue showing a severe condition,” he said.
“We want to balance saving lives and the economy.”
The emergency gives governors of the 47 prefectures stronger authority to encourage people to stay at home and businesses to close.
But the nation could lift the emergency in many regions this week if new coronavirus infections are under control.
A Reuters poll forecasts Japan has slipped into recession as the health crisis is expected to have led to a second straight quarter of economic contraction in January-March.
Analysts expect an even deeper contraction in the current quarter, as the state of emergency in April kept many citizens at home and forced businesses to close.
Another index for leading economic indicators, which is a gauge of the economy a few months ahead and is compiled using data such as job offers and consumer sentiment, fell 8.1 points to 83.8 from February.
It was the biggest drop on record since comparable data became available from 1985.
The government has already a multi-billion dollar package of stimulus measures to backstop the economy, and on Monday Prime Minister Shinzo Abe signalled readiness to compile a second supplementary budget during the current Diet session running through June..
(Editing by Shri Navaratnam and Jacqueline Wong)