Japan’s Economy Grows At Double Digits After Recession

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Japan’s economy booked double-digit growth in the last quarter of 2020, the second quarter in a row, continuing to recover following a historic recession, a government report showed on Monday.

The economy grew at an annualised rate of 12.7 percent in the October-to-December period, beating the median forecast of 9.4-per-cent growth by analysts.

The survey, carried out by the Nikkei Business Daily, came after an annualised 22.7-percent expansion in the third quarter.

In 2020, the economy shrank by 4.8 percent due to a tax hike and the COVID-19 pandemic, marking the first contraction in 11 years, according to the Cabinet Office.

Economic Revitalisation Minister, Yasutoshi Nishimura, said the 2020 GDP figure reflected “the very severe situation,” while the reading in the October-to-December quarter showed a “bottoming out and the potential resilience of Japan’s economy.”

However, analysts expect the economy to contract once again in the first quarter of this year as Japan has had a coronavirus state of emergency in 10 prefectures, including Tokyo and Osaka, since early January.

The government requested that residents in the regions refrain from unnecessary outings and that bars and restaurants close by 8:00 pm.

In the October-to-December period, private consumption rose 2.2 percent quarter-on-quarter following a 5.1-percent increase in the previous quarter.

On the other hand, corporate investment grew 4.5 percent – the first growth in three quarters, the Cabinet Office said in a statement.

Exports surged 11.1 percent in the quarter following a 7.4-percent rise in the third quarter, while imports rose 4.1 percent, marking the first increase in the second quarter.

In July, the government launched a travel promotion campaign to reinvigorate local economies, and the tourism industry hit hard by the pandemic. But it was suspended in late December following a resurgence of infections.

In the second quarter of 2020, as the pandemic and a consumption tax increase from late 2019 hit, Japan’s economy shrank by a record annualised 29.3 percent for the third straight quarterly contraction.