Senior Economist Alvin Liew at UOB Group checks out the recently published GDP figures in the Japanese economy.
Key Quotes
“Japan extended its growth rebound in 4Q 2020 following its record 3Q economic activity surge from the pandemic-ravaged trough in 2Q. Its 1st preliminary estimate of 4Q GDP recorded a double-digit growth of +12.7% q/q annualized rate (3.0% q/q), higher than Bloomberg median estimates of +10.1% annualized rate but still a step down from the record +22.7% q/q annualized rate (5.3% q/q) in 3Q. Private consumption and external demand continued to support the recovery of GDP with the added boost from business spending while another drawdown in inventories damped the overall recovery.”
“On the domestic front, the third stimulus package ordered by PM Suga will help blunt some of the negative impact of COVID-19 while the Bank of Japan’s upcoming review its QQE framework in the March 2021 MPM could portend monetary policy changes that will help further prop up the Japanese economy with more monetary stimulus. And while there is not likely to be any immediate improvement in the US-China relations, a period of new negotiations under the Biden administration may reduce the risk of another trade confrontation and the status quo will be a win for global trade.”
“We expect Japan to briefly return to contraction in 1Q 2021 and thereafter resume its growth trajectory from 2Q onwards as the vaccination program gets progressively rolled out. We now expect full-year GDP to grow by 3.2% in 2021 (from +2.8% previously estimated) compared to the 4.9% contraction in 2020.”
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