Japan’s economy shrinks in first quarter as Covid-19 impacts consumption

Japan’s economy shrank more than expected in the first quarter as private consumption in the country dropped amid nationwide curbs to combat the Covid-19 pandemic.

Japan’s economy shrank more than expected in the first quarter as the slow vaccine rollout and a resurgence in Covid-19 infections hit consumption, reinforcing expectations the country will lag major trading partners in emerging from the pandemic. Extended state of emergency curbs are likely to keep any recovery in the current quarter modest, analysts say, adding to challenges for policymakers seeking to pull Japan out of the doldrums. "With the medical situation still worsening and the vaccine rollout too slow, it will take until the end of the year for output to return to pre-virus levels," said Marcel Thieliant, senior Japan economist at Capital Economics.