Japan became the latest major economy to bounce back from the devastation of the coronavirus, as lockdowns eased and pent-up demand led to surging domestic consumption and a rebound in exports.
But the recovery is unlikely to be long-lived, analysts warn, as a surge in new virus cases has led to a second round of lockdowns in the United States and Europe and threatens to dampen sentiment in Japan.
The country’s economy, the world’s third largest, surged 5 percent during the July-to-September period, for an annualized growth rate of 21.4 percent, after three straight quarters of contraction. The performance follows spurts of growth in the United States and China, the No. 1 and 2 global economies, after the initial hits caused by the pandemic.
Japan’s economy had contracted a revised 8.2 percent last quarter as the pandemic kept consumers home and devastated already weak demand for the country’s exports. The collapse in growth paralleled similarly disastrous numbers for most of the world’s major economies.
While the country appears to be on the road to recovery, severe economic damage remains, according to Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.
When the pandemic hit in February, Japan’s economy had already begun to shrink because of slumping demand from China, a tax increase on Japan’s consumers and a costly typhoon last October. That underlying weakness made it the first among major economies to fall into recession.
Japan declared a national emergency in mid-April, asking people to stay home and businesses to close, but by early summer case numbers had dropped to a few hundred a day nationwide, and life returned to something approaching normal.
Large government subsidies kept workers in their jobs and companies in business. To stimulate the service sector, officials provided discounts for those willing to travel and eat out.
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