Japan’s economy shrank at the fastest pace in almost six years in the December quarter as last year’s sales tax hike hit consumer and business spending. 

 

Economy Minister Yasutoshi Nishimura said the government was ready to take all necessary steps and was watching the impact the coronavirus outbreak could have on the economy and specifically tourism.

 

“The government had hoped Japan’s economy would continue a moderate recovery. But we must be vigilant against the impact of the coronavirus on domestic and overseas economies,” he said in a statement.

 

In late January, the International Monetary Fund said that Japan’s economy growing faster than previously expected this year, citing a boost from the stimulus package unveiled last month by Prime Minister Shinzo Abe.

 

The IMF forecast Japan’s economy would expand 0.7% in 2020, up from a 0.5% forecast in October.

 

That forecast is expected to be revised downward when the IMF releases its next outlook.  How far down will be largely driven by the impact of the coronavirus on retail sales and exports.