Japan: GDP risks an uncertain outlook - UOB

FXStreet reports that Senior Economist at UOB Group Alvin Liew reviews the latest GDP figures in the Japanese economy.

“Hopes for a sustained recovery into early 2021 was dashed with the resurgence of COVID19 infections in Japan. Its 1st preliminary estimate of 1Q 2021 GDP slipped back into decline as it recorded -5.1% q/q annualized rate (-1.3% q/q) after two quarters of expansion in 2H 2020. All the main engines of the economy faltered in 1Q and domestic demand fell by 1.1% q/q led by weaker private consumption spending which accounted for nearly half of the fall in headline GDP.”

“The resurgence of COVID-19 infections, and the tightening of restriction measures to contain its spread (again) continues to plague Japan, clouding its outlook as it puts private consumption on hold and a big question mark on the upcoming rescheduled Tokyo Olympic Games. A major stumbling block to Japan’s recovery could be the slow pace to its COVID19 vaccine rollout.”

“We still expect Japan to resume its growth trajectory from 2Q (3.7% q/q SAAR) onwards but we have lowered the full-year GDP growth to 2.5% in 2021 (from +3.2% previously estimated), compared to the revised 4.7% contraction in 2020. Growth is thereafter expected to ease further to 2.2% in 2022.”