TOKYO - Japan’s economy is projected to suffer the worst slump since after World War II due to the coronavirus (COVID-19) pandemic although its GDP fell less than initially predicted in the first quarter (Q1) of 2020.

According to data published on Monday (8/6), Japan’s GDP contracted 2.2% year on year (yoy) in Q1 despite initial predictions indicating a drop of 3.4% yoy.

Japanese banks are dealing with spiking lending demands, which reached the fastest pace on record in May, as companies struggle to obtain funding amid declining sales during the pandemic.

According to Japanese Economic and Fiscal Policy Minister Yasutoshi Nishimura, the government should focus on assisting struggling businesses while the Bank of Japan (BOJ) should avoid increasing negative interest rates.

“We’re not at a stage yet where we want to stimulate consumption and encourage people to travel a lot. Efforts to stimulate consumption should wait a bit more,” Mr Nishimura told Reuters.

In contrast to the US and European countries, which have shifted their focuses to boosting growth, Japan is still primarily focusing on preventing a second wave of infection. As of Sunday (7/6), the country has 17,141 confirmed COVID-19 cases with 15,139 recoveries and 916 deaths. (MS)