Covid surge causes Japan’s economy to shrink faster than expected
The surge in Covid-19 cases in the summer and the consequent drop in consumer spending caused the Japanese economy to shrink faster than expected in the third quarter.
The revised data released by the Cabinet Office of Japan on Wednesday showed that between July and September, Japan’s gross domestic product (GDP) contracted at an annual rate of 3.6%.
This is faster than the 3.0% contraction predicted by the government Preliminary reading The third quarter GDP announced in mid-November. Analysts surveyed by Bloomberg unanimously predict that the revised contraction rate will reach 3.2%.
Although no formal lockdown was ordered, the surge in cases has prompted Many restaurants and bars To limit business hours.
Bond and stock traders in Tokyo said that if consumers respond similarly to the rapid increase in COVID-19-related infections, the sharp decline in consumption in this case may be detrimental to the next few months. Omicron variants.
Although Japan in general, and Tokyo in particular, has successfully achieved one of the lowest infection rates in developed countries since the summer without imposing stricter restrictions on public life, officials are cautious about the Omicron variant manner.
Japan soon Strengthen border control Opinion polls show that for foreign tourists with strong public support, hopes that their tourism economy will soon reopen are dashed.
In preliminary estimates, private consumption fell 1.1% from April to June. The revised drop was 1.3%.
Net exports also caused a greater drag than previously estimated. At the same time, the government has raised capital expenditures and housing investment.
But economists warn against exaggerating the deterioration.
Takashi Miwa, chief economist at Nomura Securities, said that private consumption and Public investment As the country’s fifth wave of coronavirus coincides with difficulties in the global supply chain, it has already touched the third quarter GDP.
He pointed out that the Cabinet Office also raised the quarterly period from April to June by 0.5 percentage points.
“Most of these amendments offset each other. It is inaccurate to assume that Japan’s economic deterioration is more serious than previously announced by the Cabinet Office,” Sanwa said.
On Tuesday, government data showed that Japanese household spending fell for the third consecutive month in October year-on-year.
However, the 0.6% decrease compared with the same period last year was slower than the decline in August and September. This supports the hope that with the relaxation of epidemic restrictions and Japan’s high vaccination rate so that customers can rest assured to return to restaurants and shops, Japan’s consumer economy will begin to recover more strongly.
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