How RCEP and domestic demand are boosting Japan’s hopes for economic recovery
- Japan’s fortunes appear to be looking up as its economy grew 5 per cent in the third quarter with jumps in private consumption and exports, especially to China
- Challenges still loom, though, with uncertainty over US-China relations, the fate of the Tokyo Olympics and a worrying spike in Covid-19 cases
There are a number of reasons for this. First, the jump has been attributed to increases in domestic demand and exports. This means the stimulus package announced by the Japanese government earlier this year seems to have worked.
Earlier this year, then prime minister Shinzo Abe announced an economic package worth close to 108 trillion yen (US$1 trillion), nearly 20 per cent of Japan’s GDP. In addition, the government announced plans to give 220 billion yen to Japanese companies moving their supply chains from China back to Japan and 23.5 billion yen to companies moving their supply chains to third countries.
Recent figures indicate a 4.7 per cent jump in private consumption in the third quarter, with Japanese spending more on cars, leisure and restaurants. In addition, growing external demand contributed to GDP growth. In October, exports to China expanded by 10.2 per cent while those to the US increased by 2.5 per cent compared to September figures.
Second, Japan has refrained from taking harsh measures to combat the pandemic. Though a state of emergency was imposed earlier this year, the rules were much less restrictive than in most other countries.
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Japan currently has 1,920 Covid-19 deaths, which is remarkable for a country of 126 million people, many of whom live in densely populated cities.
