Japan extends economic recovery as exports, capex shake off COVID pain

But the recovery slowed from the third quarter's blistering pace, underscoring the challenge policymakers face in preventing the spread of the coronavirus without choking off a fragile recovery. The world's third-largest economy grew an annualised 12.7% in October-December, government data showed on Monday, marking the second straight quarter of increase and exceeding a median market forecast for a 9.5% gain.

Reuters | Updated: 15-02-2021 07:25 IST | Created: 15-02-2021 07:25 IST
Japan extends economic recovery as exports, capex shake off COVID pain

Japan's economy expanded more than expected in the fourth quarter, extending its recovery from its worst postwar recession as a rebound in overseas demand boosted exports and capital expenditure. But the recovery slowed from the third quarter's blistering pace, underscoring the challenge policymakers face in preventing the spread of the coronavirus without choking off a fragile recovery.

The world's third-largest economy grew an annualised 12.7% in October-December, government data showed on Monday, marking the second straight quarter of increase and exceeding a median market forecast for a 9.5% gain. It was a slowdown from a revised 22.7% surge in the previous quarter, when the economy got a lift from pent-up demand after a previous state of emergency was lifted in May.

"The fourth-quarter recovery turned out stronger than expected," said Masaki Kuwahara, senior economist at Nomura Securities. "It's true the economy contracted for the year 2020. But it has been steadily picking up since summer, driven by domestic and external demand."

Private consumption, which makes up more than half of the economy, rose 2.2%, slowing from the 5.1% increase in the previous quarter but exceeding market forecasts for a 1.8% gain. A global rebound in manufacturing activity also gave exports and capital expenditure a much-needed boost, the data showed.

External demand, or exports minus imports, added 1.0% point to fourth-quarter GDP growth. Capital expenditure grew 4.5%, marking the first increase in three quarters, the data showed. For the full coronavirus-stricken year, Japan's economy contracted 4.8%, marking the first annual fall since 2009.

Japan's economy has gradually emerged from last year's initial state of emergency curbs thanks to a rebound in exports. But the government's decision to roll out new restrictions from January has heightened the chance of another recession, clouding the outlook for a fragile recovery.

Takumi Tsunoda, senior economist at Shinkin Central Bank Research, expects a complete recovery from the pandemic slump to be difficult as Japan lags western economies in vaccine distribution. "The conditions are such that Japan will not be able to avoid negative growth in the first quarter," he said.

"There is a high possibility that there will be a repeating cycle of coronavirus infections spreading and being contained this year, which means that consumption is not likely to recover at the expected pace."

Also Read: Olympics-Undaunted by pandemic, S.Sudan athletes in Japan fix eyes on the prize

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


TRENDING

OPINION / BLOG / INTERVIEW

Viral variants and vaccine nationalism pose two-pronged threat to Covid victory

... ...

Tracking Fintech during COVID-19: Harnessing power of technology

Its abundantly clear now that as fintech cements its place in the financial sector, accelerated further by the COVID-19 pandemic, it could open the sector to new possibilities by harnessing the power of technology to deliver financial ...

Tectonic turns: How technology shaped healthcare over the decades

Tracing an episodic evolution, with technology at the interface of human and his health....

World Water Day sees crises of inequality in countries both rich and poor

... ...

Videos

Latest News

Pompeo violated ethics rules by asking State Dept employees to do personal tasks -watchdog

Former U.S. Secretary of State Mike Pompeo violated federal ethics rules governing the use of taxpayer-funded resources when he, and his wife, asked State Department employees to carry out personal tasks more than 100 times, a government wa...

Biden and Japan's Suga project unity against China's assertiveness

President Joe Biden on Friday sought to present a united front with Japanese Prime Minister Yoshihide Suga to counter an increasingly assertive China as the U.S. leader held his first face-to-face White House summit since taking office. Bid...

Chicagoans plan rally for 13-year-old boy killed by policeman

Hundreds of Chicagoans are expected to rally on Friday evening to show solidarity with the family of Adam Toledo, a day after the city released a graphic video of a police officer shooting and killing the 13-year-old boy in an alley two wee...

EXCLUSIVE-Brazil needs $10 bln a year in aid for carbon neutrality by 2050, minister says

Brazils environment minister, Ricardo Salles, told Reuters on Friday that Brazil would need to receive 10 billion annually in foreign aid in order to reach economy-wide net zero carbon emissions by 2050, instead of 2060 as currently planned...

Give Feedback