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Japan's economy rebounds on solid consumption, Omicron clouds outlook

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Leika Kihara and Daniel Leussink, Reuters

<p>TOKYO - Japan&#x27;s economy rebounded in the final three months of 2021 as falling coronavirus cases helped prop up consumption, though rising raw material costs and a spike in new Omicron variant infections cloud the outlook.</p><p>Some analysts expect the economy to contract again in the current quarter as rising COVID-19 cases and supply chain disruptions hit factory output, heightening challenges for policymakers in sustaining a fragile recovery.</p><p>The world&#x27;s third-largest economy expanded an annualized 5.4 percent in October-December after contracting a revised 2.7 percent in the previous quarter, government data showed on Tuesday, falling short of a median market forecast for a 5.8 percent gain.</p><p>The increase was driven largely by a 2.7 percent quarter-on-quarter rise in private consumption, which accounts for more than half of Japan&#x27;s gross domestic product (GDP). The expansion compared with market forecasts for a 2.2 percent gain.</p><p>&quot;The data confirmed a consumption-led rebound in the final quarter as COVID-19 curbs were lifted,&quot; said Takeshi Minami, chief economist at Norinchukin Research Institute.</p><p>But the recovery could be short-lived as a surge in Omicron variant cases and geopolitical risks over Ukraine were likely to be drags on growth, Minami added.</p><p>&quot;The economy will likely stall in January-March or it could even contract, depending on how the Omicron variant may affect service-sector consumption.&quot;</p><p>Capital expenditure rose 0.4 percent, against market forecast for a 0.5 percent increase. External demand added 0.2 percent point to GDP growth in October-December, compared with market forecasts of a 0.3 point contribution.</p><p>Japan ended state of emergency curbs to combat the pandemic from October last year, which, coupled with a decline in COVID-19 cases, helped lift consumption through the end of 2021.</p><p>But a record spike in Omicron cases forced the government to impose loose curbs on most areas and keep borders closed, which likely dampened consumption since the outset of this year.</p><p>Rising Omicron infections have also forced some manufacturers to halt production, causing output disruptions and delivery delays at auto giants such as Toyota Motor Corp .</p><p>Some analysts expect Japan&#x27;s economy will decline in the current quarter as chip shortages, supply snags and slowing Chinese growth weigh on output, adding to the expected weakness in consumption.</p><div><strong>(Reporting by Leika Kihara and Daniel Leussink; Additional reporting by Tetsushi Kajimoto and Kantaro Komiya; Editing by Sam Holmes)</strong></div><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/02/14/22/ph-japan-to-hold-high-level-infra-meeting-dof">PH, Japan to hold &#x27;high-level&#x27; infra meeting on subway, other railways, roads: DOF</a></li>	<li><a href="https://news.abs-cbn.com/overseas/02/12/22/japan-to-consider-easing-nonresident-foreigner-entry-ban">Japan to consider easing nonresident foreigner entry ban</a></li></ul><div><strong>RELATED VIDEO</strong></div><figure class="op-interactive"><iframe height="315" src="https://www.youtube.com/embed/qWX6XumnbhY?enablejsapi=1" width="560"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

Japan's economy rebounded but rising raw material costs and a spike in new Omicron variant infections cloud the outlook.

Japan's economy rebounds on solid consumption, Omicron clouds outlook

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Japan's economy rebounds on solid consumption, Omicron clouds outlook

Leika Kihara and Daniel Leussink,

Reuters

Published February 15, 2022 09:14 AM PHT

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Japan

Japanese economy

omicron

COVID-19

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