According to preliminary data, Japan’s economy bounced back from the pandemic crash faster and beyond expectations before the Tokyo Olympics. The country’s economy expanded at twice the rate forecast between April and June.
The Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More
Japan's Economy Recovery
During the second quarter this year statistics show that Japan's gross domestic product (GDP) grew by an annualized 1.3%, from a 3.7% decline three months prior.
“The latest figures were far better than the expected gain of 0.7% and came as spending by individuals and businesses bounced back from the initial impact of the coronavirus.”
However, Japan's recovery lags when compared to that of the U.S., which showed a 6.5% increase in the second quarter of 2021. Meanwhile, “new data also shows that the economic recovery of its larger neighbor, China, is losing steam.”
The underlying element of Japan’s slow recovery is the pandemic. The government is struggling to contain the rapid expansion of the virus, as Economy Minister Yasutoshi Nishimura said, “our priority is to prevent the spread of the virus. It's very bad for the economy for this situation to drag on.”
The economic growth of the second quarter of this year is mainly due to the 7.3% increase in household consumption, the main pillar of Japanese GDP, which had been suffering from successive sanitary alerts.
“I have very mixed feelings about this GDP result,” Nishimura said. By the end of 2020, Japan's economy had contracted by nearly 4.8% over the year, which meant its first shrinkage in more than 10 years.
Growing exports drove the country’s comeback from the pandemic, but the sluggish rollout of its vaccination program “and a series of state of emergency measures have hurt consumption.”
The spread of the Delta variant in neighboring Asian markets has created supply chain disruptions, affecting Japanese manufacturers. Experts predict that this could throw a spanner into recovering production output and affect exports.
“It is the latest sign that the recovery of the world's second-largest economy is losing steam as export growth cools and new Covid-19 outbreaks disrupt business,” BBC reports.