Japanese Economy Stopped Shrinking in August

The Japanese government updated its economic assessment on Wednesday for the first time since May 2019, after an important indicator improved in August, indicating a gradual recovery from the impact of the coronavirus pandemic.

The Cabinet Office said on Wednesday that the Synchronous Economic Indicators Index, which measures a data set that includes factory production, employment and retail sales numbers, rose 1.1 points in an initial reading in August to 79.4 points from the previous month.

Based on the index data, the office said that this shows that economic activity has stopped shrinking in the world’s third largest economy, an improvement from previous expectations in July of the economy’s “deterioration”.

These data provide some relief to Prime Minister Yoshihide Suga, who has pledged to contain the outbreak of the Coronavirus and revive the ailing Japanese economy.

But analysts expect the pace of recovery will not be strong enough to offset the losses resulting from the Corona pandemic, highlighting the challenge policymakers face to revive the economy.

The Japanese economy slipped further towards the worst post-war contraction in the second quarter of the year, affected by the repercussions of the Corona pandemic.