Daily Management Review

Japanese Economy Likely Returned To Growth In Q4 Of 2021 Driven By Strong Domestic Consumption


Japanese Economy Likely Returned To Growth In Q4 Of 2021 Driven By Strong Domestic Consumption
According to a poll of economists conducted by the global news agency Reuters, the economy of Japan most probably regained some steam and growth in the final three months of 2021 with a potential increase in consumption amid a decline in Covid-19 cases.
The survey however also warned that the Japanese economy could slip back into contraction in the current quarter, the first quarter of 2022, because of an increase in |Cobid-19 infections caused by the Omicron variant of the coronavirus.
The poll also revealed that there was a rise in wholesale prices in January compared to the same month in the previous year, indicating that rising energy and raw material costs will continue to erode the profitability of businesses in the economy.
According to a median prediction of 18 analysts polled by Reuters, the world's third-largest economy gained an annualized 5.8 per cent in the October-December quarter of 2021, rebounding from a 3.6 per cent contraction in the third quarter.
According to the poll, the gain in economic growth was mostly caused by a 2.2 per cent increase in private consumption in the country, which accounts for more than half of the total gross domestic product (GDP) of Japan.
According to the survey, capital spending increased by 0.5 per cent during the fourth quarter of last year, while external demand increased by 0.3 per cent in the same period, after neither adding nor subtracting from the previous quarter's numbers.
"Japan's economy clearly turned up in October-December, as foot traffic recovered thanks to the lifting of Covid-19 curbs and falling infection cases," said economists at SMBC Nikko Securities.
Separate data is expected to show wholesale prices grew 8.2 per cent year over year in January, dropping for the second month in a row but still lingering near the record 9.0% recorded in November, according to the poll.
According to the study, household expenditure increased by 0.3 per cent in December from the previous year, the first increase in five months.
At 8:50 a.m. on Feb. 15 (2350 GMT, Feb. 14), the government will disclose preliminary October-December GDP figures, as well as household expenditure data at 8:30 a.m. on Feb. 8. (2330 GMT, Feb. 7).
On February 10, at 8:50 a.m., the Bank of Japan will announce wholesale price statistics (2350 GMT, Feb. 9).
In most areas of Japan, the government has reinstated coronavirus limitations, and local governments are considering even tighter restrictions to slow the spread of the Omicron form. For the first time on Thursday, Japan's daily infection rate surpassed 100,000 for the first time.