Japan to sink into deep recession due to coronavirus, BOJ to ease again – Reuters poll

According to the latest Reuters poll of economists, a majority of them see the Japanese economy contracting sharply for a third straight quartering April-June due to the coronavirus outbreak-led economic and civic disruptions.

Key findings

“The world’s third-largest economy is forecast to contract an annualized 3.7% in January-March and 6.1% in April-June, the March 30-April 6 poll showed.

The economy is expected to shrink 2.1% in the current fiscal year that began on April 1 but rebound 1.6% the following year.

Under the gloomiest scenario, the economy likely fell 5.0% in the first quarter and will shrink 10.0% in the current quarter, according to the poll.

Core consumer inflation, which excludes volatile fresh food costs, will be only 0.1% in the second and third quarters, and slip to 0.3% in October-December.

The poll also showed nearly 80%, or 31 of 40 economists predicted the BOJ’s next policy move would be further easing.

Among economists who said the bank’s next move would be to ease, 16 said the BOJ would expand its stimulus in April and six predicted action in July.

The most likely steps to be taken by the BOJ would be an increase in asset purchases such as corporate bonds and commercial paper.”