Japan’s official entry into recession

Japan’s official entry into recession

Japan becomes the first nation to fall into the recession as of now due to the world situation due to the pandemic. But let’s dig out all about the conditions prevailing in the nation that led to such sad consequences. Here is the complete guide that can help you know all about the updates of Japan’s official entry to the recession.

What is a recession?

Before we fast-forward to the news which seems horrifying, we first need to know the term recession perfectly. So basically, this is the term coined for the situation where a country’s economy starts taking a downturn. The economic startles with this and the GDP start seeing crazy depression. A nation reaches this situation where there is a constant fall of the GDP for a longer period. According to the thumb rule followed by the world, the least period considered to declare an economy recessive is six months.

Japan’s economy condition:

The recession is not for the first time in Japan’s economic history. They have dealt with it many times. But they haven’t even got up from such economy towards betterment which the trench was always there and it has now been bigger with gradual approaches which were faulty.

Factors contributing to the fall of the economy in Japan:

Japan’s economic policy was faulty enough and this contributed to such a situation. Here are a few problems that contribute to the inclusion of Japan in the recession officially:

  1. Increase in sales tax: The nation imposed heavy sales taxes on its citizens whereas this can never be a move to increase the economy of the nation. In India, we have seen the decrease of the taxation imposed on the citizens which has led to a sharp depression in the nation’s wealth and economy.
  2. The pandemic: It is quite evident that the pandemic broke out in the world in now affect ting the economies of the world. Japan has no strict lockdown since January. The state emergency was declared and that was all. It was just now that the nation has taken a toll upon the faults and has taken the matter to the peak of seriousness.
  3. Dependent on China and the US for supply chains: Japan is heavily dependent on China and the US for trade. The nations are now in no state of offering benefits to the fellow neighbors. This directly has an impact on Japan’s economy.
  4. Reliant on export: The nation is largely reliant on export business. When the world is now dealing with the pandemic, Japan is at the verge of despair which is the result of its huge dependence on the trade
  5. A drop in sales of iconic companies like Toyota, Honda: Toyota and Honda are a few big-names in Japan. These companies are facing a serious fall in the sales which requires no logical explanation as the world suffers a sudden breaking out of a virus. This also had its contribution to the falling economy of Japan.
  6. Reliant on tourism: Japan is quite dependent on tourism and this is why they have failed to strike a balance in the depressing economic status.

Solution:

The largest package in the world has been offered to the citizens by the Japanese government where 20% of the GDP is schemed to be productively utilized to make the economy function again. The government is even looking forward to moving the manufacturing centers from China to other nations which are again an amazing approach that can bring about a difference in the economy.