Japan’s economy likely rebounded in the fourth quarter on strong consumption

A man wearing a protective face mask amid the coronavirus disease (COVID-19) outbreak walks in a shopping district in Tokyo, Japan, August 17, 2020. REUTERS/Kim Kyung-Hoon

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TOKYO, Feb 4 (Reuters) – Japan’s economy likely rebounded in the last three months of 2021 as consumption rose amid a drop in COVID-19 cases, a Reuters poll showed, although it could fall back into contraction this quarter after a spike in Omicron Variant Infections.

The survey also showed that wholesale prices continued to rise in January from a year earlier, a sign that rising energy and raw material costs will continue to erode corporate profits.

The world’s third-largest economy likely recorded annualized growth of 5.8% in October-December, rebounding from a 3.6% contraction in the third quarter, according to a median forecast of 18 economists polled by Reuters.

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The increase was largely due to a 2.2% rise in private consumption, which accounts for more than half of Japan’s gross domestic product (GDP), according to the survey.

Capital spending likely rose 0.5%, while external demand added 0.3% to GDP growth in October-December after neither adding nor detracting from the previous quarter’s figures, the poll shows. .

“Japan’s economy clearly rebounded in October-December as foot traffic picked up on the back of the lifting of COVID-19 restrictions and falling infection cases,” economists said. SMBC Nikko Securities.

Separate data will likely show wholesale prices rose 8.2% in January from a year earlier, slowing for the second month in a row but still close to the record high of 9.0% reached in November, the poll found. .

Household spending likely rose 0.3% in December from a year earlier, marking the first increase in five months, according to the survey.

The government will release preliminary October-December GDP data at 8:50 a.m. on Feb. 15 (23:50 GMT, Feb. 14) and household spending data at 8:30 a.m. on Feb. 8 (23:30 GMT, Feb. 7).

The Bank of Japan will release wholesale price data at 8:50 a.m. on Feb. 10 (23:50 GMT, Feb. 9).

The government has reinstated coronavirus curbs in most parts of Japan, and local authorities are mulling even tighter restrictions to stop the rapid spread of the Omicron variant. On Thursday, daily infections in Japan topped 100,000 for the first time. Read more

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Reporting by Kantaro Komiya; Editing by Simon Cameron-Moore

Our standards: The Thomson Reuters Trust Principles.

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