Highs and Lows in the Japanese Economy

(click to enlarge) Like most economies across the globe, Japan’s has taken a hit from the coronavirus pandemic. The world’s third-largest economy contracted for three consecutive quarters beginning in Q4 of 2019. Its real gross domestic product shrank 4.8 percent in 2020 – the largest decrease since 2009. Still, all things considered, Japan has weathered the storm fairly well. Its unemployment rate, which has hovered around 2.5 percent for the past three years, did not rise significantly in 2020, thanks largely to employment protection subsidies. To boost consumer spending, the government gave each resident 100,000 yen ($950) and launched the “Go To Travel” campaign in Q3. Japan’s real GDP spiked by 22.9 percent in that quarter. In late 2020, infection rates began to increase and the campaign was suspended, but the economy nonetheless grew by 12.7 percent in annualized terms (3 percent in seasonally adjusted terms) in Q4, exceeding projections. Domestic demand for and exports of key products also increased. Plenty of obstacles remain. The retail sector is still struggling. Some lockdown measures are still in place, and restaurants and other businesses are forced to shut by 8 p.m. The country began its vaccination drive on Feb. 17, much later […]

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