Driven by demand, Japan’s economy grew 1.3 percent
The third-quarter growth for the world’s third-largest economy was slightly lower than market expectations of 1.5 percent, and followed a revised 0.7 percent contraction in the previous quarter.
Data released by Japan’s cabinet office also showed the economy grew 1.7 percent in real terms in 2021, the first annual expansion for the economy in three years.
After a spike in virus cases in the summer of 2021, when Japan hosted the Olympics with virtually no spectators, the government lifted a virus state of emergency in October, spurring private consumption, which expanded 2.7 percent, quarter-on-quarter.
But last month, Japan brought back coronavirus restrictions on a large part of the country, including Tokyo, as it battles record infections fuelled by the Omicron variant.
The restrictions, which mainly target nightlife and are far less strict than a blanket lockdown, will be in place until early March.
Japan is facing “more damage than expected from the Omicron variant,” said Masamichi Adachi, UBS Securities Chief Economist for Japan.
While the damage from the Omicron appears to be less severe than feared for global economy, Japan may be an exception, Adachi added.
“Still, we are expecting that the Japanese economy will resume a solid recovery this year after disappointing stagnation in 2021,” he said, adding “the timing of the rebound is just delayed.”