The latest relaxation of the pandemic-related restrictions in Japan had further prompted a revival in consumer spending in Japan, which helped rebound the Japanese economy over the first quarter of 2022. We can see that the gross domestic product of Japan had risen to a 5.4% during the months of October from December last year. Also, quarter-on-quarter, the overall Japanese economy had marked a 1.3% rebound from the fall of 0.7% back in the July-September quarter last year.
Rebound in consumer spending by Kavan Choksi
カヴァン・チョクシ also points out the fact that consumer spending in Japan now makes up about half of the country’s GDP, which had increased by 2.7% compared to the previous quarter. Some industries which were fully shut down due to the Covid-19 restrictions, like the restaurants, tourism, and entertainment sectors, also started benefitting lately. The government of Japan lifted the state of emergency in 2021, which also triggered employees to return to their workplaces, which naturally boosted many related sectors. Overall, consumer spending had experienced a positive rebound and had returned to the higher levels in 2019.
The supply constraints for production materials like semiconductors were also eased during the post-pandemic boost, which allowed the electronic and automobile manufacturers to boost their production to make up for the production shortage in the previous year. This also ended up in an increase of 9.7% in the spending on consumer durables. Exports also posted a rise of about 1%.
Even though we have seen a solid recovery in production and service consumption in Japan, the CAPEX rebound seemed to be weaker due to the disruptions in the supply chain. We can see that the growth of Japan was a bit weaker when compared to that of the US, where their GDP had accelerated at a pace of 6.9% annually during the final quarter of last year. For the entire 2021, the economy of Japan had marked growth of about 1.7%, which had turned to a positive rate for the first time during and after covid for almost three years. In the year 2020, however, Japan marked a decrease of 4.5%.
Impact of Omicron
The economists believe that the Covid-19 variant of Omicron, which again caused some restrictions towards the beginning of 2022, had also caused a little drop in production. The Omicron season also caused some contraction in consumer spending during the first quarter of 2022.
In any case, カヴァン・チョクシ reiterates the fact that Japan has the capability to overcome any disasters or turmoil to recover and revamp their economy, as they had proven in the past after World War II, which tore Japan into pieces. So, once this chaos is over, we can expect steady growth in Japan’s economy and various industrial sectors to keep its strong place in manufacturing, services, and global trade.