"GDP is not fully recovered. Still in recovery"... Slowdown in recovery expected in Q4
[Asia Economy Reporter Jeong Hyunjin] The Japanese economy, which had been plummeting due to the spread of the novel coronavirus infection (COVID-19), rebounded sharply in the third quarter (July-September) with a 21.4% increase. This is the largest growth rate since 1980 and marks a return to positive growth after four consecutive quarters of decline.
According to NHK and other sources on the 16th, the Japanese Cabinet Office announced that the real gross domestic product (GDP) for the third quarter, excluding price changes, increased by 5.0% compared to the previous quarter. Assuming this trend continues for a year, the annualized GDP growth rate for the third quarter was calculated at 21.4%, the highest growth rate since records began in 1980. NHK reported that the previous highest growth rate was 12.0% in the fourth quarter (October-December) of 1989.
Japan’s GDP in the second quarter of this year decreased by 7.9% compared to the previous quarter, recording an annualized growth rate of minus (-) 28.8%. After recording the worst growth rate since World War II in the second quarter due to the impact of COVID-19, the economy rebounded in the third quarter with a high growth rate compared to the previous quarter.
Despite such a large growth rate, when looking at GDP in monetary terms, it stood at 507.6 trillion yen, which is only 94% of the GDP in the third quarter of last year, indicating that the effects of COVID-19 still remain, according to Japanese media. NHK evaluated that "GDP is still far from the pre-COVID-19 spread level, indicating that the Japanese economy is on a recovery path."
In the third quarter, Japan’s personal consumption increased by 4.7% compared to the previous quarter, and exports rose by 7.0% during the same period. Exports showed a recovery centered on automobile-related items, increasing by 7.0%, rebounding from a 17.4% decrease in the previous quarter. Capital investment decreased by 3.4%, reflecting ongoing poor performance and the impact of uncertainties about the future.
The GDP outlook for the fourth quarter is not optimistic. The recent resurgence of COVID-19 in Japan has increased uncertainty. The Nihon Keizai Shimbun reported, "Many expect the pace of recovery to slow down," adding that "the domestic and international resurgence of COVID-19 casts a shadow."
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