Bloomberg
Japan had a forecast quarter of double-digit growth
(Bloomberg) – Japan’s recovery held up better than expected in the last quarter. The economy saw double-digit growth again as exports rose, businesses invested and government incentives boosted consumer spending, despite the coronavirus spike in winter, the Cabinet Office reported on Monday at 12.7% quarter over quarter in the three months to December. The result was better than 22 out of 24 forecasts by the economists surveyed. The expansion in the fourth quarter helped the economy weather the pandemic year with a 4.8% decline, better than economists forecast and with less success than the 5.7% decline in 2009 following the global financial crisis. The Nikkei 225 Stock Average rose 1.2%, briefly surpassing 30,000 for the first time since 1990, according to the growth report. Prime Minister Yoshihide Suga confirmed that Japan’s vaccine campaign will begin on Wednesday. While the virus drives the economy, the strong performance at the end of 2020 is on the decline again. The strong performance in late 2020 suggests that the recovery could return to relatively solid levels once the country ends the state of emergency that now covers Tokyo and Japan’s other major cities. What Bloomberg’s economist says … “Resilience to consumption, exports and investment should put the economy in a better position to recover in the second quarter once virus containment measures are in place. ”- Yuki Masujima, economist. You can find the full report here. Improved trade, particularly with China, and increases in household spending continued to fuel growth, but in the fourth quarter businesses also increased their investments. That addition contributed to a faster than expected expansion and could be a signal that the Japanese company is now seeing better prospects. “It looks like business spending is finally being used due to the recovery in exports,” said Sumitomo Life Insurance Co. economist Hiroaki Muto. “The first quarter will be down again, but we are on a recovery trend.” How long the state of emergency lasts is a key factor in the immediate outlook. Falling case numbers give hope that restrictions in some areas could be lifted before the scheduled end date, March 7, but with hospital capacity still overwhelmed, that decision is still pending. Earlier this Monday, Japan said Japan would start shooting medical workers this week. “GDP shows that the economy can recover if the virus doesn’t disturb things,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc. “The pandemic has not disrupted supply chains or production capacities like an earthquake, and many households are willing to spend in the face of the low unemployment rate.” Government spending, loan support from the Bank of Japan, and a corporate and employee culture that has traditionally been job security Increases in front of high wages have helped keep unemployment at just 2.9%, a fraction of the rates in the US and parts of Europe. Even so, the compromise was wage cuts that could limit the size of a co-resuscitated consumer spending after the end of the emergency and the pent-up demand wears off on its own even if households have a floor below. More More Non-annualized GDP rose 3% qoq, compared to a consensus estimate of 2.4%. Private consumption rose by 2.2% compared to the previous quarter, compared to a 2% increase forecast by economists. Business investment rose 4.5%. Analysts had forecast an increase of 2.4%. Net exports of goods and services contributed 1 percentage point to non-annualized GDP growth. Economists forecast an increase of 0.9 percentage points. (Adds additional economist comments and updates.) For more articles like this, visit bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP
