TOKYO (AP) – Japan’s economy grew at an annual rate of 2.2 per cent in the April-June quarter, the government said yesterday, as consumer spending rebounded with the gradual lifting of pandemic precautions.
After keeping its borders closed to most travellers throughout the pandemic, Japan has slowly begun reopening to tourism, as meanwhile business has returned more or less to normal after various voluntary restrictions were eased.
That means families are venturing out and spending more, even as coronavirus infection rates have soared with the spread of the omicron variant of COVID-19.
A revised estimate put growth for the world’s third-largest economy as flat in the first quarter of the year, upgraded from an earlier reading of a 0.5 per cent contraction. The reading for the last quarter was below forecasts for 2.5 per cent annual growth. In quarterly terms, the economy expanded 0.5 per cent, surpassing its pre-pandemic size but slightly weaker than analysts had expected.
“Nevertheless, it suggests that pent-up demand from COVID-19 re-opening could continue to underpin growth ahead,” Jun Rong Yeap of IG said in a commentary.
Private consumption jumped at an annual rate of 4.6 per cent but appeared to be constrained by surging prices. After decades of fighting deflation, or weakening prices and wages, soaring global costs for energy and other commodities are hitting Japanese pocketbooks and balance sheets. Japan imports nearly all of its oil, gas and coal as well as food and industrial components used in manufacturing.
The inflation rate remains relatively low. The Bank of Japan’s most recent estimate for the fiscal year through March 2023 is for 2.3 per cent consumer inflation, way below the recent four-decade high levels of eight to nine per cent in the United States (US) that now show signs of easing.
