Japan’s economy contracts as energy prices soar

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Category: Business

Listening

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. sap / sæp / (v.) – to cause something to slowly become weak
    Example:

    If you don’t drink enough water, the hot temperature will sap your strength.


  2. resource-poor / ˈri sɔrs pʊər / (adj.) – not having enough natural resources such as coal, trees, and oil
    Example:

    Resource-poor countries need to import most of their food and oil from other nations.


  3. squeeze / skwiz / (n.) – a situation where people’s money cannot purchase or buy as many goods or services as before, usually because of inflation or high taxes
    Example:

    The tuition hike this year will surely put a squeeze on the budget of many families.


  4. spending power / ˈspɛnd ɪŋ ˈpaʊ ər / (n.) – the ability of people to pay for goods or services based on how much money they have
    Example:

    The low cost of goods increases people’s spending power.


  5. dismal / ˈdɪz məl / (adj.) – describing something that’s very bad or poor
    Example:

    The team was eliminated early in the competition because of its dismal performance.


Article

Read the text below.

Japan’s economy shrank at a worse than expected annual rate of 1% in the first quarter, as rising prices and COVID-19 restrictions sapped spending and investment, according to data released Wednesday.


Japan’s real gross domestic product, or GDP, the sum of the value of a nation’s products and services, contracted 0.2% in January-March compared to the previous quarter, the Cabinet Office said.


The world’s third-largest economy managed modest growth in the final quarter of last year, but the economy sank the quarter before that.


Russia’s war in Ukraine has pushed already high energy prices still higher, a big minus for resource-poor Japan. The Japanese yen has weakened, trading at about 130 yen to the dollar, making imports relatively more expensive.


Japan never had a lockdown but has periodically put restrictions on businesses, mostly asking restaurants and bars to close early to curb the spread of the coronavirus pandemic. The last such restrictions ended in March.


Some medical experts say the nation has seen a surge in COVID-19 cases since then, because of the more contagious omicron variant. Japan has recorded about 30,000 COVID-19-related deaths so far.


The reintroduction of restrictions to curb the spread of the infections and the impact of inflation putting a squeeze on household spending power are pulling growth downward, analysts say.


But some expect an economic rebound in months ahead.


“After a dismal start to the year, we think the economy will bounce back this quarter thanks to a recovery in consumer spending, particularly in services, following the full lifting of COVID-19 restrictions in Japan,” said Takayuki Toji, an economist at SuMi TRUST.


This article was provided by The Associated Press.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Do you think resource-poor countries can find a way to sustain themselves without relying on other countries? Why or why not? Discuss.
  • According to the Historical Statistics of the World Economy, Japan has climbed from having the 9th largest economy in the world in 1870 to being in 3rd place currently. Do you think Japan will be able to maintain its ranking amid the current economic contraction? Why or why not? Discuss.

Discussion B

  • The more contagious omicron variant caused the government to reintroduce COVID-19 restrictions earlier this year. Do you think any of these restrictions should be permanent (ex. wearing masks in public, closing businesses early)? Why or why not? Discuss.
  • Sources say that Japan is reopening its borders to some leisure travelers in June 2022. Though this will contribute to the economic rebound of the country, it might worsen the spread of the omicron variant. Do you agree with the government’s decision to welcome tourists soon? Why or why not? Discuss.