Japan’s Economy Surges, but Covid-19 Looms
However, the last two quarters of the growth failed to offset the damage caused by the pandemic. The economy fell by 4.8 percent over the course of the year. This was the first annual decline since 2009, when the country suffered the aftermath of the global financial crisis.
Apr. 14, 2021, 6:09 p.m. ET
While the people of Japan don’t face the same short-term economic threat as the US, growth is expected to slow again in the first three months of this year.
After a sharp increase in the daily number of infections, Japan declared a second, albeit more limited, state of emergency in late December. The edict, originally announced for a month, was extended to early March, in part in response to the emergence of new, more contagious variants of the coronavirus.
“Because of the urgency, consumer spending, especially on services, will decrease in the first three months of the year,” said Akane Yamaguchi, an economist at the Daiwa Institute of Research.
However, she said the damage will not be nearly as severe as it was last spring, when lockdowns destroyed demand for exports and Japan’s national emergency spread across the country.
Japan has further complicated the economic picture for 2021 and has been slow to start vaccinating.
The Pfizer shot was the first to receive approval from Japanese regulators on Sunday. Frontline health workers are expected to get their first doses this week, but it will be months before the public comes into question.
The effects of the pandemic have been much less severe in Japan than in the west. The total death toll is below 7,000, and daily infection rates peaked at around 8,000 in early January. However, a solid vaccination program could give more people the confidence to return to shops and restaurants, said Nagahama of Dai-Ichi Life Research.