Japanese Economic system Sees Restoration From Pandemic Stoop | Enterprise Information

BY YURI KAGEYAMA, AP Business writer

TOKYO (AP) – The Japanese economy grew at an annual rate of 12.7% from October through December. This was the second quarter in a row that the slump caused by the coronavirus pandemic recovered.

The third largest economy in the world recorded growth in consumption, government spending and exports in the last quarter of last year compared to the previous quarter, the cabinet said.

Japan’s seasonally adjusted gross domestic product had grown at a dramatic annual rate of 22.9% from July to September.

GDP is the total value of a nation’s products and services. The annualized rate shows what the increase or decrease would have been if the same pace had continued for a year.

The outlook for the future seems relatively good as trade resumes and vaccines are introduced in countries that are Japan’s main trading partners, such as the US and other Asian countries.

For the 2020 calendar year, the Japanese economy fell 4.8%, the first year of contraction in 11 years. According to preliminary data, the economy grew by 3% from October to December compared to the previous quarter.

Japan never had a lockdown on COVID-19 as it tried to keep business going while encouraging work from home and social distancing.

In Tokyo and some other urban areas where clusters of infection have emerged, a so-called state of emergency is in place, with restaurants and other shops closing at 8 p.m.

Junichi Makino, chief economist at SMBC Nikko Securities, said that while the first quarter of this year could see a setback due to the state of emergency, a gradual recovery is expected as overseas economies return to normal and the emergency likely ends next month .

“With the coronavirus pandemic contained, the state of emergency end and the vaccine rolled out, the Japanese economy is expected to recover and normalize again from April-June,” Makino said.

Japan’s larger macroeconomic problems such as falling wages and falling international competitiveness, which have led to stagnation in recent decades, remain.

Social changes that take time would be required to address these issues, e.g. B. Encouraging overseas investment and establishing education to promote entrepreneurship.

Naoya Oshikubo, Senior Economist at SuMi TRUST or Sumitomo Mitsui Trust Asset Management, notes an element of “revenge consumption” in the GDP data.

That means shoppers are trying to make up for “lost time” by buying more from staying home and not buying as much for long periods of time because of the pandemic, he said.

Government programs to boost spending, including last year’s “GoTo” discount campaign, which ran temporarily when coronavirus cases rose, also helped boost GDP. The data also showed a recovery in machinery investment.

A vaccine rollout in Japan has not yet started, but is set to begin with medical professionals this week. Japan has recorded far fewer such deaths than the US and some other countries, with around 6,900 COVID-19 deaths.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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