Key Sentence:
- Japan has recovered faster than expected from the downturn caused by the pandemic ahead of the Tokyo Olympics.
- Official figures reveal that the world’s third-largest economy grew twice as fast as forecast from April to June.
However, analysts have warned that growth will moderate this quarter. After a state of emergency was imposed to contain a spike in Covid-19 infections. Meanwhile, new data also shows that the economic recovery of its larger neighbor, China, is losing momentum.
Preliminary data showed that Japan’s gross domestic product (GDP) rose 1.3% annually in the second quarter of this year. This comes after a 3.7% decline in the previous three months. The latest Japan’s economy figures are a much better-than-expected 0.7% gain and come as costs to individuals and businesses recover from the initial impact of the coronavirus.
However, the recovery in Japan is still much slower than in other developed countries. As the United States, which saw GDP grow 6.5% in the second quarter of this year.
Japan’s relatively weak recovery underscores how difficult it is for the government to contain the pandemic.
“I have very mixed feelings respecting this GDP result,” Economy Minister Yasutoshi Nishimura said behind the data was released.
“Our priority is to prevent the extent of the virus. It is awful for the economy to prolong this situation,” he added.
In 2020, Japan’s economy contracted more than 4.8% for the year, the first decline in more than a decade. The country’s administration has bounced back from the first hit of the pandemic last year, thanks to stable exports. However, the slow spread of vaccination programs and a series of emergency measures have negatively affected consumption.
At the same time, a surge in Delta cases in other parts of Asia further disrupted the supply chains of some Japanese manufacturers. This could damage factory production and jeopardize an already fragile recovery.
In Tokyo, Japan’s Nikkei index lost 1.9% in Monday morning trade. In China, on the other hand, factory production and retail sales grew more slowly than expected last month compared to the previous year. The latest sign is that the world’s second-largest economy is losing momentum. As export growth slows and the new Covid-19 outbreak disrupts business.