Japan's economy posted a contraction during January-March after a rebound the previous quarter, as the country's Covid-19 sub-emergency restrictions dented consumer spending and capped fuel consumption.

 

Gross domestic product fell at an annualised 1pc rate during January-March compared with the previous quarter, according to government data released on 18 May. The fall follows a revised 3.8pc growth in October-December 2021. The spread of the Covid-19 Omicron variant, as well as reduced public works, shrunk the country's economy.

 

The Japanese government imposed a Covid-19 semi-state of emergency in large parts of the country over January-March, affecting the country's economic activity especially in the commercial and transportation sectors. The semi-emergency measures shortened opening hours at restaurants and bars, suspended the serving of alcohol and limited the number of spectators at events, subject to prefectural governments' decisions.

 

Japan's gasoline consumption averaged 737,735 b/d during January-March, down by 7pc from the previous quarter, while its jet fuel demand fell by 4pc to 55,215 b/d during the period, according to the Petroleum Association of Japan.

 

But Japan's economy is expected to recover during the current April-June quarter, as the government fully lifted the Covid-19 semi-state of emergency on 21 March. The country had its traditional Golden Weekly holiday over 29 April-8 May without any Covid-19 restrictions for the first time in three years. This boosted domestic travel demand that increased consumption of gasoline and jet fuel.