Japan leads economic ‘Zoom boom’ out of recession
JAPAN’S economy has bounced back from recession with growth of 5% in the third quarter of this year.
It had seen its economy shrink during 2020 as lockdowns hit its manufacturing sector and consumer spending.
The world’s third biggest economy is now showing signs of recovery, although some analysts cautioned that further growth is likely to be modest.
Asian economies are leading the way for a global economic recovery, in what some have called a “Zoom boom”.
This refers to the increase in demand for screens and laptops as more people work from home, and use online meeting platforms like Zoom. Asian economies are among the largest producers of laptops, communication equipment and other electronics.
The Asian region will also get a boost after signing a mega trade deal agreed over the weekend, called the Regional Comprehensive Economic Partnership (RCEP).
Other signatories include China, South Korea, Australia and Singapore.
A rise in domestic demand as well as exports have helped drive economic growth in Japan.
Japan’s third-quarter gross domestic product (GDP) growth of 5% is compared to the previous quarter, which saw its economy shrink 8.2%.
This turnaround is the fastest pace on record for Japanese economic growth. At an annualised rate, assuming this growth continued for 12 months, it represents expansion of 21.4%.
GDP for the second quarter, covering April to June, was Japan’s worst figure since data became available in 1980 – worse than that of the 2008 global financial crisis.
The bounceback is welcome news for Japan’s government which has avoided the tough lockdown measures seen in some other countries.
The global economy as a whole is expected to contract by 4.4% this year, while the US will shrink by 4.3%, according to the International Monetary Fund.
However, Asian economies are leading the way when it comes to showing signs of recovery. China remains on track to grow by about 2% this year, the most of any major economy.
“We call it the Zoom boom,” said Rory Green, an economist at research firm TS Lombard.
Also on Monday, China released new economic data that showed its factory output grew 6.9% in October, compared to the same month last year.
Earlier this year, Japan unveiled two stimulus packages worth a combined $2.2tn (£1.7tn), including cash payments to households and small business loans.
Prime Minister Yoshihide Suga, who took over in September, has also instructed his cabinet to come up with another package to boost Japan’s pandemic-hit economy.
Despite this latest quarterly growth, the Japanese economy is still expected to shrink by 5.6% for its full fiscal year, which ends in March 2021. – bbc.com