A growth of 5 per cent in the third quarter of this year had=s now pushed the Japanese economy out of recession.
With the novel coronavirus pandemic induced lockdowns hit its manufacturing sector and consumer spending, the country witnessed a shrinking of its economy during 2020.
There are some signs of recovery being shown by the third biggest economy of the world even though predictions of modest growth in the future have been made by some analysts.
In what has been described as a “Zoom boom”, the way for a global economic recovery is being shown by Asian economies.
“Zoom boom” is referred to the increase in demand from consumers for screens and laptops with more people choosing to work from home and make use of online meeting platforms like Zoom for holding meetings because of the pandemic.
The biggest makers of laptops, communication equipment and other electronics devices are located in Asia.
The signing a mega trade deal agreed over the weekend, called the Regional Comprehensive Economic Partnership (RCEP), is also expected to boost the Asian region. Other signatories include China, South Korea, Australia and Singapore.
Economic growth in Japan has been fuelled by a rise in domestic demand as well as exports.
The 5 per cent growth in Japan’s gross domestic product (GDP) reported in the third quarter was in comparison to the GDP growth in the previous quarter when the economy had contracted by 8.2 per cent.
However, the pace of the growth is the fastest ever for the Japanese economy. It represents expansion of 21.4 per cent at an annualised rate, assuming this growth continued for 12 months.
The GDP growth rate of Japan for the second quarter – covering the months of April to June, was the worst for the country since records had been kept since 1980. The dip in the GDP was worse than the 2008 global financial crisis.
For the Japanese government, which has more or less avoided the tough lockdown measures seen in some other countries, this rebound of the economy is welcome news.
According to the forecast of the International Monetary Fund, there will be a 4.4 per cent contraction in the global economy as a whole for this year while a shrinking of 4.3 per cent is being expected for the United States economy.
However, with respect to showing signs of recovery, Asian economies are leading the way. The Chinese economy is set to expand at about 2 per cent for the year which is the most predicted for any major economy.
“We call it the Zoom boom,” said Rory Green, an economist at research firm TS Lombard.
Two stimulus packages worth a combined $2.2tn (£1.7tn) was unveiled by Japan earlier this year. The package included cash payments to households and small business loans.
(Adapted from BBC.com)