According to a Reuters poll of economists, Japan’s economy will grow at a slower rate than previously thought this quarter, despite expectations for a strong rebound in consumption after showing resilience in the three months through March.
According to the poll, China’s slowing economic growth and a surge in global raw material prices will cause the world’s third-largest economy at risk. Both of which could harm Japan’s key manufacturing sector.
However, the slower expansion suggests that the economy will recover to pre-coronavirus pandemic levels by the end of this quarter, according to roughly 70% of poll respondents.
According to the median forecast of 36 analysts in the May 18-27 poll. The economy will grow by 4.5% on an annualized basis this quarter. It’s down from 5.1% in April.
“The rate of recovery in the domestic economy is slow.”
“Corporate profit may be severely impacted if raw material prices continue to rise due to limited pass-through of those costs into final prices.”
Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
According to the poll, the most frequently mentioned issue posing a risk to Japan’s economy in the second half of the year was a slowing in Chinese economic growth.
In recent weeks, China has used extreme COVID-19 lockdowns to halt economic activity in major cities such as Shanghai. As the result, it disrupts supply chains and casts doubt on the country’s economic outlook.
China’s tough anti-pandemic measures have already resulted in a drop in Japanese shipments to and from Asia’s largest economy in April, according to Japanese trade data released earlier this month.
According to Japanese trade data released earlier this month, China’s strict anti-pandemic measures have already resulted in a drop in Japanese shipments to and from Asia’s largest economy in April.
Five people chose the next quarter, two chose October-December, and one chose April-June next year.
However, analysts said that even if the economy recovered quickly to end-2019 levels. It would still fall short of higher levels seen earlier that year. Before being hit by a sales tax hike in October 2019.
“The economy will likely exceed its pre-sales tax hike level in July-September next year.”
Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
Rising raw material costs were the second-most frequently cited risk for the second half of 2022. It follows by faster-than-expected US monetary policy tightening.
Other possibilities included the spread of new coronavirus variants; shortages of semiconductor chips and parts; and the negative impact of domestic price increases on private consumption.
However, none identified a persistently weaker yen as the most serious threat to the economy in the second half of the year.
According to the poll, core consumer prices, which exclude volatile fresh food prices, will rise 2.0 percent this fiscal year. It will run through March next year, and 0.9% in fiscal 2023.
The economy will grow by 2.3% this fiscal year, followed by 1.5% growth in fiscal 2023.
Both forecasts indicated that analysts expected growth to be slightly weaker than predicted in the previous month’s poll.
Source: Reuters
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