Japan accelerates economic recovery with help from exports and investment – 02/15/2021 – Market

Japan’s economy grew more than expected in the fourth quarter of 2020, amplifying the recovery from its worst post-war recession thanks to a rebound in foreign demand that boosted exports and capital spending.

The annualized index rose 12.7% between October and December, according to government data on Monday (15), beating the market’s average forecast of 9.5%.

But the recovery has slowed from the strong pace of the third quarter, and restrictions on a new state of emergency cloud the outlook, underscoring the challenge facing policymakers to prevent the spread of Covid-19 without jeopardizing a fragile recovery , especially in the struggling consumer sector.

This was less than the revised 22.7% growth in the previous quarter, when the economy received a boost from pent-up demand following the revocation of the state of emergency in May.

“The conditions are such that Japan cannot avoid negative growth in the first quarter,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research.

“There is a strong possibility that there will be a repeated cycle of coronavirus infections spreading and being contained this year, which means consumption is unlikely to recover at the expected rate.”

Throughout the year plagued by the coronavirus, the Japanese economy contracted 4.8%, the first annual decline since 2009.

But the Japanese performance between October and December was more robust than the 4% growth in the United States and the 2.8% decline in the euro area.

With two consecutive quarters of strong growth, the Japanese economy has probably recovered 90% of the losses caused by the pandemic, analysts said.

“The recovery in Japan has proceeded at a much faster pace than initially expected,” said Yoshiki Shinke, chief economist at the Dai-ichi Life Research Institute.

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