Japan will not be an exception. Like other economic powers, the country has suffered the full brunt of the Covid-19 crisis. Its gross domestic product (GDP) thus fell by 4.8% in 2020 against the backdrop of a pandemic, according to preliminary figures released by the government on Monday. This is its first annual contraction since 2009.
The world’s third-largest economy fell severely during the first part of the year, especially between April and the end of June (-8.3%), whole sections of economic activity having been paralyzed during the state of emergency introduced in spring by the government in the face of Covid-19. The rebound in the world’s third-largest economy, which began in the middle of the year, however, exceeded expectations in the fourth quarter (+ 3% over one quarter).
The state of emergency reinstated
The consensus of economists from the Bloomberg agency expected an increase of 2.4% over the past quarter, after a sharp recovery of 5.3% over the period July-September. Japanese exports drove growth at the end of the year, having further accelerated their rebound in the fourth quarter (+ 11.1% over one quarter). Japanese household consumption continued to be dynamic between October and the end of December (+ 2.2%), also contributing significantly to growth.
And after two quarters of decline, non-residential business investment also started to rise at the end of the year (+ 4.5% over one quarter). However, the renewed momentum of Japanese GDP since mid-2020 may be interrupted in the first quarter of this year, even if the outlook for 2021 as a whole remains good, according to economists. Because the government has put in place a state of emergency since the beginning of January in several departments of the country, including those of Tokyo and its suburbs, to try to stop a strong local upsurge of the coronavirus since the end of 2020. Although being lighter than the first state of emergency in spring 2020, this device, which is due to last until March 7, risks breaking the positive dynamic in household consumption.
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