The Japanese economy expanded 22.9 percent year-on-year in the third quarter, as businesses and personal spending recovered from COVID-19 pandemic-related shocks in the spring and early summer.
Economists said the upward revision released yesterday was in line with forecasts and suggests that the world’s third-largest economy is on the mend from the recession that started late last year, even before the pandemic hit.
“The sizeable upward revision to Q3 GDP and the sharp rise in ‘core’ household spending in October support our view that Japan’s economy will recover from the pandemic faster than the consensus expects,” Capital Economics Ltd Japan economist Tom Learmouth said. “We think GDP will rise by another 2.1 percent [quarter-on-quarter] in this quarter and surprise to the upside next year.”
Photo: EPA-EFE
Core household spending excludes housing costs, purchases of vehicles and other volatile expenditures, and is thought to best reflect consumer demand.
As is true for most major economies, the setback dealt by the pandemic has left Japan still at a lower level of economic output, 3.9 percent below the fourth quarter last year, Learmouth said.
The expansion in the third quarter coincided with a push to encourage domestic spending to make up for the loss of foreign tourism, with “Go To Travel” and “Go To Eat” programs offering steep discounts on hotels and dining out.
The economy contracted 29.2 percent year-on-year in the second quarter, when the Japanese government declared a state of emergency and sought to quell COVID-19 outbreaks with various regulations, including urging businesses to let people work from home. With international travel at a near standstill, the Tokyo Olympic Games were postponed.
The Japanese economy grew 5.3 percent quarter-on-quarter, revised upward from an earlier 5.0 percent forecast.
Most of the extra growth came from consumer and corporate spending.
Household spending outpaced retail sales, suggesting many people were making purchases online.
Government spending was also slightly higher than earlier reported.
Japanese Prime Minister Yoshihide Suga yesterday announced an additional US$700 billion stimulus package. That followed US$2.2 trillion in earlier stimulus measures.
Japan has sought to keep businesses running more or less as usual, while urging the public to wear masks, use hand sanitizer and maintain social distancing, but the number of COVID-19 cases has surged, leading some regional governments to urge residents to stay home as much as possible.
In some areas, authorities have asked bars and restaurants to close early.
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