Japan’s economic recovery from pandemic possible stalled in fourth quarter


By Leika Kihara and Kaori Kaneko

a group of people walking on a city street: Outbreak of the coronavirus disease (COVID-19) in Tokyo

Outbreak of the coronavirus sickness (COVID-19) in Tokyo

TOKYO (Reuters) – Japan’s financial growth most likely moderated in Oct-December after rebounding from its worst postwar recession before in 2020, a Reuters poll confirmed, a signal homes and companies have nevertheless to get well from the coronavirus pandemic’s huge strike.

A point out of crisis rolled out in January has inflicted further ache on usage, stoking fears of an additional financial slump that could thrust Japan again into deflation.

Analysts polled by Reuters count on the overall economy to have marked a quarter-on-quarter expansion of 2.3% in October-December, as bettering exports created up for some of the weakness in intake.

Nevertheless, that would be much slower than a 5.3% bounce in the 3rd quarter, when the lifting of the former point out of emergency assisted the financial state emerge from its worst postwar slump in the April-June quarter.

“Usage, particularly service investing, will keep on to drop even though restrictions use on economic exercise,” explained Masato Koike, an economist at Dai-ichi Lifetime Exploration Institute.

“A slump in January-March usage is unavoidable.”

Online video: Payrolls Rise Less Than Forecast, Unemployment Falls to 6.3% (Bloomberg)

Payrolls Increase Significantly less Than Forecast, Unemployment Falls to 6.3%


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Underscoring the hefty toll the pandemic took on the fragile economic climate, the central bank’s estimates in January exhibit the economic system very likely shrank 5.6% in the 12 months ending March.

Japan’s Oct-December gross domestic products (GDP) information, established for release at 8:50 a.m. on Feb. 15 (2350 GMT, Feb. 14), will likely highlight the difficulties policymakers face in supporting the financial system though stopping the spread of the virus.

On an annualised basis, the financial system probably expanded 9.5% in Oct-December just after a 22.9% gain in the earlier quarter, the poll showed.

(For an interactive graphic of Japan’s quarter-on-quarter GDP advancement, click on: https://graphics.reuters.com/JAPAN-Economic climate/GDP/oakveydmqvr/chart.png)

Even if the economy rebounds at the approximated rate in the remaining quarter of very last year, it will keep on being at around 80% the amount prior to the pandemic struck in March, analysts say.

Non-public consumption, which accounts for much more than half of the economy, very likely rose just 1.8% in Oct-December soon after a 5.1% maximize in the previous quarter, the poll confirmed.

Funds paying was projected to have risen 2.6%, which would be the first increase considering that January-March last 12 months.

External demand – or exports minus imports – possible contributed 1. share issue to Oct-December GDP advancement, in accordance to the poll.

“Brisk abroad demand from customers underpinned exports, when domestic demand acquired some raise from the government’s stimulus steps,” claimed Shinichiro Kobayashi, senior economist at Mitsubishi UFJ Study and Consulting. “But the outlook remains uncertain.”

(Reporting by Leika Kihara and Kaori Kaneko more reporting by Daniel Leussink Modifying by Sam Holmes)

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