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Japan’s Economy Shrank Sharply. Now Comes the Coronavirus.

TOKYO — Japan’s economy has already been staggered by a devastating typhoon and a wallet-shutting tax increase. Now, the coronavirus that has brought business in neighboring China to a virtual standstill threatens to knock Japan into a full-blown recession.

Japan said on Monday that its economy had shrunk at an annualized rate of 6.3 percent in the three months that ended in December, the worst contraction since mid-2014. The results predated the virus epidemic but were affected by a monthslong slump in Chinese demand for Japanese exports.

Officials had been optimistic that an easing of the effects of Typhoon Hagibis and the consumption tax increase would return the country to growth as the new year began. But then the coronavirus began its deadly spread in China, halting the lucrative flow of tourists from that country and further imperiling Japanese exports.

If Japan’s economy — the world’s third largest after the United States and China — shrinks again in the first quarter of 2020, the country will officially fall into recession for the first time since a brief dip in 2015. A recession is generally defined as two straight quarterly contractions.

It’s unclear how long the virus outbreak will continue, but the entire global economy could suffer from a prolonged shock in China, and some economists are already predicting slower growth for the year. The virus’s ripple effects are hitting Japan particularly hard: China is its largest trading partner and by far its biggest source of visitors, many of whom come ready to shop.

The spread of the coronavirus inside Japan itself also presents a wild card. The country has had the most confirmed cases outside China, with more than 400, including those from a cruise ship quarantined in Yokohama. Last week, Japan recorded its first death from the virus.

But China’s ban on group travel as it tries to contain the outbreak is the more immediate economic threat to Japan. The effects can already be seen in places like Shun Natori’s sweets shop in what is normally one of Tokyo’s busiest tourist districts.

The Coronavirus Outbreak

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

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