A year of ups and downs. In recent months, the Japanese economy has fluctuated with the waves of Covid-19 and restrictions, to end 2021 up 1.7%. An increase far from erasing the 4.5% drop in gross domestic product (GDP) recorded in 2020. In the fourth quarter, it rose by 1.3%, erasing the 0.7% decline recorded between July and September – despite the Tokyo Olympics.
“Growth at the end of the year was mainly driven by a rebound in consumption (+2.7% in the fourth quarter), particularly services”explains Norihiro Yamaguchi, at Oxford Economics, in a note on the subject. 1is October, the lull in the pandemic has, in fact, allowed Tokyo to lift the state of emergency imposed since the end of June with in particular the closing of restaurants at 9 p.m. and travel restrictions.
Industrial activity picked up thanks to demand from abroad – exports increased by 1% – as well as a slight improvement in the supply of semiconductors and spare parts from Southeast Asia. From November, Toyota returned to its usual production level, following two months of a 30% to 40% reduction in activity. In contrast, “the other components of domestic demand were weak, such as business investment (+0.4%)”note Norihiro Yamaguchi.
Record recovery plan
For the coming months, caution prevails. The spread of the Omicron variant justified new restrictions until the end of February. The contaminations and the shortage of microprocessors have forced Toyota or Toshiba to revise downwards their forecasts of results for the year ended at the end of March.
To support activity, Japan adopted, in December, a record recovery plan of 36,000 billion yen (275 billion euros), “in order to create a virtuous cycle of growth and distribution of wealth”, according to Prime Minister Fumio Kishida.
Despite this, Shinichiro Kobayashi, economist at Mitsubishi UFJ Research and Consulting, fears a “sharp drop in consumption compared to the last quarter of 2021, due to Omicron”, but also the rise in prices which also affects the archipelago. Tokyo also fears to suffer the consequences of an increase in interest rates in the United States, or even in Europe. Continuing its ultra-accommodating monetary policy, the Bank of Japan rules out following this movement, for the time being.