After the government relaxed COVID-19 business restrictions, official data released on Monday revealed that Japan’s GDP grew in the three months leading up to June.
Due to increased capital investment and greater consumer spending, the third-largest economy in the world had quarterly growth of 0.5 percent, which fell short of market estimates of 0.7 percent.
While the nation never issued harsh stay-at-home directives during the pandemic, viral limitations that mostly affected commercial opening hours were lifted by the government in March.
However, inbound tourism is still only available as part of group excursions, and the economy is struggling due to the energy price issue and worries about a worldwide recession fueled by sharp inflation.
According to data issued by the Cabinet Office, private consumption increased by 1.1 percent from April to June as opposed to the 0.3 percent seen in the January-March quarter.
Compared to the previous quarter’s 0.3 percent decrease, capital spending increased by 1.4 percent.
In a note released before to the GDP report, BNP Paribas noted that “capital investment returned to growth, while consumption of services showed a rather strong rebound after the government ended a quasi-state of emergency in late March.”
Additionally, according to Mitsubishi UFJ Research and Consulting, “when the Omicron variant’s spread slowed, private consumption steadily rose, particularly for in-person services, and boosted the overall economy.”
The information is preliminary, and GDP numbers are frequently updated in subsequent months.
The Cabinet Office first stated in May that the GDP declined marginally in the first quarter of 2022, but this was later changed to zero percent on Monday. This indicates that after a slight rebound in the final quarter of 2021, no change was noticed.
Although not at the ferocious rate witnessed in the United States and many other major nations, consumer prices are rising in Japan.
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The Bank of Japan is maintaining its long-held monetary easing policies in an effort to create stable growth and believes that the price increases are only transitory. As a result of this move, the yen has fallen to 24-year lows versus the dollar.
A difficult environment for growth has also been generated by the Covid-19 lockdowns in China, which have disrupted supply chains, and the sky-high energy costs brought on by the conflict in Ukraine.
“We now think the economy’s recovery is less impressive than we had expected at the end of last year, with an unexpected resurgence of Covid-19 infections at the beginning of this year and now,” Masamichi Adachi and Go Kurihara of UBS said in a statement ahead of the data release.
The latest wave of COVID-19 infections in Japan is shattering all previous records. In total, it has reported 35,000 disease-related deaths, a significantly lower number than many other nations.
(With inputs from agencies)
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