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Japan’s GDP Set for Biggest Hit Since 2014 Ahead of Virus

  • Analysts estimate a 3.8% contraction on typhoon, tax impact
  • Clobbered economy now facing further punch from coronavirus
People wearing face masks ride escalators in Tokyo on Feb. 13.

People wearing face masks ride escalators in Tokyo on Feb. 13.

Photographer: Tomohiro Ohsumi/Getty Images 

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Japan’s economy likely suffered its biggest contraction since 2014 at the end of last year leaving it in a vulnerable state, as fallout from China’s viral outbreak threatens to turn a one-quarter-slump into a recession.

A sharp drop in consumer spending after a sales tax hike is seen as the main culprit behind an annualized 3.8% contraction estimated by economists. The slide would be the worst for Japan since the second quarter of 2014, when a previous tax increase prompted the economy to shrink by 7.4%.