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Japan exits the economic recession into a difficult future

The Japanese economy grew at a record rate in the third quarter to recover again from the largest economic recession in the country, as the improvement in exports and the rate of consumption helped the country to overcome the damage caused by the Corona crisis, and its economic growth increased by 21.4% on an annual basis, exceeding the average expectations in the market that A growth rate of no more than 18.9% is expected.

As the recovery of the economy was mainly affected by the increase in personal consumption, which increased by 4.7% with the increase in household spending on cars, restaurants and leisure time, in addition to that external demand around the world increased the proportion of exports by 7% and led to an overall growth in the household products market GDP By 2.9%, but on the other hand, capital spending fell by 3.4% for the second time in a row during the past two quarters, representing a sign of concern among policy makers who hope to revive the economy through private sector expenditures.

Japan’s economy minister has stated that the economy is still suffering from an output gap of 30 trillion yen (equivalent to 287% billion dollars), which must be compensated by a series of new business deals. This gap occurs when the actual production is less than the macroeconomic capacity, which indicates a weak situation in demand, and without additional deals, Japan will suffer a financial downturn next year due to the impact of the exhaustion of the stocks of the two stimulus packages that were secured at the beginning of this year and they are estimated at 2.2 in total Trillion dollars, the Prime Minister of Japan instructed the cabinet to create another package of stimulus, which is expected to be worth about 10-30 trillion yen.

Despite the signs of improvement in the past months, analysts expect that Japan’s economy, which is the third largest in the world, will shrink by 5.6% by the end of the fiscal year in March 2021 and that it will need several years to return to its levels before the Corona crisis. (1 dollar = 104.52 Japanese yen).

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