Japan’s financial system rebounded within the third quarter, however the coronavirus disaster weighs: Reuters ballot
© Reuters. At the construction site of an office building in Tokyo, a worker is seen beneath a banner with anti-coronavirus disease (COVID-19) safety slogans
By Kaori Kaneko
TOKYO (Reuters) – Japan’s economy likely rebounded in the third quarter as global demand picked up, according to a survey by Reuters. However, the effects of the coronavirus crisis have continued and it could take some time to return to pre-pandemic levels.
The gross domestic product (GDP) is expected to have grown by 18.9% on an annual basis from July to September. This was the result of a survey of 18 economists. This was the fastest rate of growth since the existence of comparable data in 1980.
On a quarterly basis, GDP is expected to increase 4.4% in the third quarter, after contracting 7.9% in the last three months.
A return to growth would pull the world’s third largest economy out of its worst post-war recession, but analysts say a rapid recovery like China’s is unlikely.
“The economy likely rebounded strongly from July to September, thanks to a steady recovery in exports and the rebound in consumer spending after the government lifted emergency status,” said Shinichiro Kobayashi, chief economist at Mitsubishi UFJ (NYSE 🙂 Research and Consulting.
“Although the economy has escaped its worst, the pace of recovery is slow as economic activity has remained low and investment has remained weak.”
Household consumption, which accounts for more than half of the Japanese economy, rose 5.1% in the quarter after falling 7.9% from April to June.
Foreign demand – or exports minus imports – likely added 2.6 percentage points to the quarter’s GDP growth as global economic activity picked up again with the coronavirus lockdowns eased.
However, according to the survey, investments are likely to have declined 3.0% in the third quarter after falling 4.7% in the previous quarter.
The Cabinet Office will announce GDP on Monday, November 16 at 8:50 a.m. (2350 GMT Sunday).
Core orders for machinery, a very volatile series of data seen as an indicator of investment over the next six to nine months, is likely to have fallen 0.7% in September compared to the previous month.
That would be the first drop in three months as companies have been cautious on business spending due to the pandemic.
The cabinet office will publish the machine orders on November 12th.
Data from Friday showed Japan’s household spending declined year over year in September and real wages fell for the seventh straight month.
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