Japan revises up Q3 GDP growth to 22.9%; Y73.6tr stimulus announced

SINGAPORE (ICIS)–Japan’s third-quarter economic growth was revised up to 22.9% year on year from the initial estimate of 21.4%, staging a strong rebound from a deep slump in the previous three months, official data showed on Tuesday.

Quarter-on-quarter seasonally adjusted growth was nudged up to 5.3% from 5.0% previously, according to Japan’s Cabinet Office.

“The better outcome was primarily due to an upward revision to consumption and business investment,” said Stefan Angrick, senior economist at research firm Oxford Economics, in a note.

“Private residential investment, government investment and government consumption also saw modest upgrades,” he said.

The coronavirus pandemic has plunged the third-biggest economy, along with the rest of the world, into a deep recession.

Japan’s GDP had shrunk at a record annualized rate of 28.1% in the June quarter, when most of the globe implemented lockdowns to contain the spread of the deadly virus.

“Looking ahead, a renewed wave of Covid-19 [coronavirus disease 2019] infections and lockdowns abroad will weigh on domestic and overseas spending in the near term,” Angrick said.

Further gains can be expected in the December quarter, but the pace of improvement will slow relative to the third quarter.

“However, encouraging news of an effective coronavirus vaccine presents an upside risk to growth next year,” he added.

Coronavirus cases in Tokyo continued to spike, with daily cases exceeding 2,000 in the second half of November. This prompted the capital to raise alert to the highest of four levels on 19 November.

As of 7 December, Japan’s confirmed coronavirus cases totaled 162,067, with 2,335 deaths, according to data from the World Health Organisation (WHO).

To ensure continued recovery into next year, Japanese Prime Minister Yoshihide Suga announced on Tuesday a fresh stimulus package worth yen (Y) 73.6tr ($707bn).

The new stimulus package will raise Japan’s total pandemic-related stimulus to about $3tr.

Global economic recovery from a deep recession brought on by the pandemic hinges on aggressive government spending.

Focus article by Pearl Bantillo

($1 = Y104.03)

Photo: Pedestrians in face masks walk a busy Shibuya crossway in Tokyo, Japan, 27 November 2020. (Photo by KIMIMASA MAYAMA/EPA-EFE/Shutterstock)

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