Japan's growth drops amid pandemic, worse times likely ahead

TOKYO (AP) — Japan plunged into recession in the first quarter as the coronavirus pandemic battered manufacturing, exports and spending, and economists expect worse damage lies ahead.

The world's third-largest economy contracted at a 3.4% annual, seasonally adjusted rate in January-March, the Cabinet Office reported Monday. It shrank 0.9% from the previous quarter.

Analysts say things are expected to get worse as Japan endures its biggest challenge since World War II.

The latest data put Japan squarely into a technical recession, defined as two straight quarters of contraction. The economy contracted at a 1.9% annual pace in October-December.

Japan is extremely vulnerable to repercussions from the pandemic given its dependence on trade with both China and the U.S., the country where the pandemic began and the country where it has been hit hardest.

But trouble was brewing even before the virus began disrupting trade and travel, and more recently, domestic business activity and consumer spending.

After years of strenuous efforts to keep growth on track despite a shrinking and fast-aging population, growth was flat in July-September and a mere 0.5% in April-June, according to the latest numbers.

Among other things, that longer-term weakness reflects disruptions from a trade war between the U.S. and China, Japan's two biggest single trading partners, slowing global growth and a slowdown in China.

Then came the outbreaks.

Manufacturers that are pillars of Japan's economy, such as Toyota Motor Corp., have reported dismal financial results. Some companies have been unable to provide forecasts for this fiscal year. Profitability is nose-diving as people economize and stay home. Production at some plants has halted.

The government has come up with a rescue package of nearly...