Japan Press Weekly

Tweet

2020 July 1 - 7 [ECONOMY]

Sluggish domestic economy and uncertainty about future become clearer

The domestic economy has been hit hard by the coronavirus crisis. The January-March GDP figures in real terms contracted 0.6% compared to the previous quarter.

According to Tokyo Shoko Research, as of June 30, 294 businesses went bankrupt due to the coronavirus pandemic, showing a rapid increase from two bankruptcies in February. The largest industry group with coronavirus-induced business failures was the restaurant sector with 46 followed by hotels with 39 and apparel-related businesses with 36.

The government labor force survey shows that the number of non-regular employees in May decreased by 610,000 from a year earlier, and 470,000 or 70% were women. The unemployment figures went up by 190,000 from the previous month to 1.97 million, marking four consecutive months of increase. The number of "potentially unemployed" such as persons who are currently out of work, as of May, was 4.23 million. About half of them or 2.09 million were non-regular workers.

Meanwhile, the jobs-to-applicants ratio in May stood at 1.2, down 0.12 points from April, which was the second largest ever decline. The year-on-year rate of new job openings fell by 32.1%. In particular, the rate of job vacancies in the hotel and food service industries fell by 55.9%, a substantial drop.

A survey conducted by the National Federation of Small Business Associations in May, a business sentiment index showed a minus 74.6, down 1.7 percentage points from April, which was worse than the minus 69.0 as of the time of the 2008 global economic crisis.

The ongoing COVID-19 pandemic, on top of the negative impact of the consumption tax hike to 10% imposed last October, are squeezing business operations of SMEs and many owners are worried about the future of their businesses, according to the National Federation of Small Business Associations.

Experts state that economic prospects are still uncertain and it will take time before economic recovery is realized. A delay in providing compensation for businesses and providing support for maintaining employment will further exacerbate Japan's employment situation.