Japan takes steps to recovery amid uncertainty of third wave

By GENN

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Japan became the latest major economy to report an expansion in output in the third quarter of the year. An easing of lockdown restrictions unleashed pent-up demand which contributed to a surge in domestic consumption and a rebound in exports.

In the three months to September 2020, the Japanese economy grew by 5%, compared to a decline of 8.2% in the  previous quarter. The latest headline figures point to the fastest pace of growth on record, which on an annualised rate, represents output expansion of over 21%.

Despite the encouraging news from the world’s third largest economy, analysts are cautious amid the prospect of a third wave of coronavirus infections both in the country and the region, and whether measures restrictive of economic activity may be re-introduced.

Speaking to the New York Times, Yoshiki Shinke, Chief economist at the Dai-Chi Life Research Institute, said “things could change a lot depending on what happens with the coronavirus. As of right now, all you can say is that there is a lot of uncertainty”.

Fellow economist Akane Yamaguchi elaborated on the nature of the uncertainty facing the Japanese economy, stating the recovery really “depends on overseas economies”. Adding, “there is a downside risk as Europe locks down, and in the United States if the president tightens prevention policies and infections increase”.

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