Xinhua News Agency, Tokyo, July 5th Question: The risk of a rebound of the epidemic in Japan still exists or will continue to hinder economic recovery
Xinhua News Agency reporter Liu Chunyan
In the first half of this year, most of the world‘s major economies rebounded strongly, but Japan, the third largest economy, had a weak recovery. At present, the rebound of the new crown epidemic is still the biggest risk facing Japan’s economic recovery in the second half of the year.
The World Bank released the “Global Economic Outlook” report in June, raising the forecast for global economic growth this year to 5.6%, but Japan’s economic growth rate is expected to be only 2.9%.
The Japanese Cabinet Office recently released a monthly economic report saying that affected by the epidemic, the situation of Japan’s economic recovery is still grim. Although the recovery momentum continues, some areas are still weak. Looking ahead, as overseas demand continues to improve, Japan’s economy is expected to continue to recover under the premise of strengthening domestic epidemic prevention measures and accelerating the speed of vaccination.
Since the state of emergency was lifted in Tokyo and Osaka Prefecture on June 21, the number of new crown cases in Japan has started to climb. The Tokyo Olympics is about to open this month. According to the Tokyo Olympic Organizing Committee, although overseas spectators are barred from entering Japan, more than 50,000 people will visit Japan during the Olympics, including athletes and other Olympic-related personnel. The rebound of the epidemic and the Japanese government may be forced to declare a state of emergency again have become the biggest worries of all walks of life in Japan.
In the first quarter of this year, Japan’s actual gross domestic product (GDP) fell by 1.0% month-on-month due to the successive implementation of emergency states in Japan’s three major economic circles. Domestic and foreign demand dragged down the economy by 0.8 percentage points and 0.2 percentage points respectively.
Benefiting from the strong recovery of major overseas markets, external demand has become an important factor supporting Japan’s economic recovery. In May, Japan’s exports increased by 49.6% year-on-year, which is the third consecutive month of year-on-year growth. While exports to China maintained year-on-year growth for 11 consecutive months, exports to the United States and the European Union also increased for 3 consecutive months.
However, the recovery of domestic demand in Japan is slow and fragile, and the recovery of personal consumption, which accounts for more than half of the Japanese economy, is still slow. Experts predict that consumption restrictions related to epidemic prevention will continue at least until the end of the Olympic Games.
Japan’s Minister of Economic Regeneration, Yasunori Nishimura, said that during the Olympics, he will pay close attention to the shortage of medical resources and will issue a state of emergency again if necessary.
At the same time, Japan’s domestic new crown vaccination progress is slow. According to statistics, as of July 1, the inoculation rates of the first and second shots in Japan were 23.79% and 12.58%, respectively. In this case, even if the state of emergency is lifted, many Japanese are expected to avoid high-risk consumer activities such as traveling and dining.
Nihon Keizai Shimbun analysis believes that in the second quarter, although Japan’s exports grew strongly and equipment investment increased, personal consumption continued to be sluggish, and real GDP is expected to grow only 0.7% from the previous quarter.
Taro Saito, head of the Economic Research Department of the Nissei Institute of Basic Research, believes that personal consumption in Japan is expected to recover rapidly in the third quarter, but the government may issue a state of emergency again, and consumption still faces downward risks.
Saito Taro said that the epidemic in Japan is difficult to completely end, and the possibility of a sharp rebound still exists. It is expected that Japan’s actual GDP may return to the level of the fourth quarter of 2019 in the first quarter of next year.
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