JAKARTA (TheInsiderStories) – Japan‘ economy expanded in the fourth quarter (4Q) of 2020 from its worst postwar recession by an annualized 12.7 percent compared to last year, based on the government data released today (02/15). The cabinet office also reported on a quarter basis the economy grew by 3.0 percent
Its a sign the country was emerging from the initial hit from the COVID-19 pandemic and also marking a second straight quarter of gains. But, in a whole 2020, the world third largest economy contracted 4.8 percent, made its first annual decline since 2009.
Two weeks ago, Prime Minister of Japan, Yoshihide Suga, has decided to extend the state of emergency in Saitama, Chiba, Tokyo, Kanagawa, Gifu, Aichi, Kyoto, Osaka, Hyogo, and Fukuoka prefectures until March 7, while lifting it in Tochigi Prefecture as of Feb. 7. The “mini lockdown”, which was implemented since last year, has disrupted the Japanese economy to the worst level in the country’ history.
During the extension period, he said, his administration will continue the streamlined measures in place and centered on shortening the operating hours of dining and drinking establishments. In March, said the premier, the schools will have graduation ceremonies and spring vacation will also start.
“For prefectures that intensively implement the measures and see their situation improve, we will lift the declaration of a state of emergency, without waiting for the declaration to be lifted on March 7,” said Suga.
As for vaccines, Japan has concluded contracts to receive a supply of 314 million doses from three companies and the vaccination will start by late February. As the impacts of the COVID-19 become prolonged, he continued, the government will use the Emergency Small-Amount Fund and other schemes to respond to those who are struggling to cover their living expenses.
“We will now increase the credit amount from JPY1.4 million to JPY2.0 million (US$19.04 . Those whose incomes have dropped will be exempted from having to repay the funds,” adds by the premier.
Earlier, IHS Markit sees, the Japanese economy to contracted by 5.4 percent in 2020, due to the impact of the pandemic, domestic economic activity and on new export orders for Japanese manufacturing exports. During the first wave of pandemic cases in the second quarter of last year, the Japanese government imposed a state of emergency to contain the pandemic, which was temporarily successful.
However, a major new upsurge in cases that intensified during December 2020 has resulted in the Japanese government imposing a second state of emergency decree on Tokyo and several nearby prefectures, although its scope will initially be relatively limited compared with the 2020 state of emergency. This is expected to have a significant impact on Japanese GDP in the first quarter of 2021, particularly on consumption expenditure on retailing and dining out.
Consequently, the rollout of COVID-19 vaccines is likely to play a critical role in the gradual economic recovery of the Japanese economy during 2021. Japan has sufficient orders in place for three vaccines, AstraZeneca, Moderna and the Pfizer and BioNTech vaccines. Sufficient quantities of vaccines are on order to make significant progress towards inoculating the population by mid-2021.
Based on the expected imminent commencement of Japan’ immunization program, Japan’ GDP is expected to return to positive growth of 2.6 percent in 2021. The latest headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) rose from 49.0 in November to reach the 50.0 no-change threshold in December, the highest reading of Japan’ Manufacturing PMI since April 2019.
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