The Japanese Gross Domestic Product (GDP) suffered a 7.8% drop in the second quarter of 2020, marking a record 27.8% drop on an annualized basis as the nation combats the Covid-19 coronavirus pandemic. Earlier this year, Japan slipped into economic recession after experiencing two successive quarters of economic decline. Japan's GDP is now at decade-low levels, wiping out the effects of economic stimulus policies spearheaded by Prime Minister Shinzo Abe in late 2012.  

According to Japanese economists and analysts, two main factors behind the slump includes a severe decline in domestic consumption, which accounts for well over 50% of the Japanese economy, and a sharp fall in exports. Domestic consumption fell 8.2%, capital expenditure fell 1.5%, and the automobile industry also suffered large declines while overseas shipments fell 18.5%.

This third successive declining quarter puts additional pressure on the Japanese economy that was already suffering slowdowns prior to the Covid-19 pandemic, struggling with the effects of a sales tax hike up to 10% in 2019, and combating the estimated 15 billion United States dollars worth of damage brought by 2019's Typhoon Hagibis.

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