Japan’s economy grew at a slower 3.0% in the October-December quarter, government data showed Monday, as the coronavirus pandemic weighed on the world’s third-largest economy. Meanwhile, nevertheless, the Nikkei 225 hit a 30-year record on US gains.
The economy shrank 4.8 percent in 2020 – its first annual contraction since 2009.
Last year, virus restrictions and a 2019 consumption tax hike forced Japan into recession before a third-quarter rebound to 5.3 percent growth, a figure revised upwards slightly on Monday.
Japan emerged from recession in November after recording its worst contraction since comparable figures began to be collected in 1980, exceeding even the pain of the 2008-9 global financial crisis.
Domestic demand and net exports contributed to growth in the fourth quarter, the cabinet office said, adding that spending on housing and corporate investment rebounded.
While Monday’s figure for the fourth quarter was above the 2.4 percent predicted by economists polled by Bloomberg, it sounds the alarm for the first quarter of 2021.
Covid-19 cases began surging in Japan in late December, prompting the government to impose a virus state of emergency in much of the country including Tokyo and Osaka.
“A decline in GDP appears unavoidable in Q1 2021 due to the state of emergency declared by the government in a number of Japanese prefectures,” said Naoya Oshikubo, senior economist at SuMi Trust, in a note published ahead of Monday’s figure.
Japan’s virus measures are limited, with bars and restaurants requested but not obliged to close by 8pm and working from home strongly recommended. There are no blanket stay-at-home orders.
Oshikubo said the relative leniency of these emergency measures could help mitigate the expected contraction in the first quarter.
Stocks higher on US gains
Tokyo stocks opened higher on Monday, tracking Wall Street gains as investors digested Japan’s latest GDP data showing growth slowed in the fourth quarter.
The benchmark Nikkei 225 index rose 0.82 percent, or 242.60 points, to 29,762.67 in early trade, briefly surpassing the 30,000 level at one point — the first time it has done so in 30 years.
The broader Topix index advanced 0.66 percent, or 12.73 points, to 1,946.61.
“This week, Japanese stocks are likely to continue their upward trend,” Okasan Online Securities said.
“There was a chilling moment after the powerful quake in the Tohoku region this weekend, but the impact on the market seems to be limited.”
Traders are also eying the coronavirus vaccine rollout expected to start as early as Wednesday in Japan for healthcare professionals, it added.
“The Nikkei index is climbing as the central banks in Japan, the United States and Europe keep their massive monetary easing policies because of the pandemic,” said Masayuki Kubota, chief strategist at Rakuten Securities.
Wall Street stocks finished a solid week at all-time highs Friday with traders anticipating more US fiscal stimulus. The S&P 500 gained 0.5 percent to finish at 3,934.83.
The Dow Jones Industrial Average edged up 0.1 percent to 31,458.40, while the tech-rich Nasdaq also added 0.5 percent to 14,095.47.
In Tokyo trading, SoftBank Group rose 1.83 percent to 9,977 yen while Uniqlo casual wear operator Fast Retailing grew 1.85 percent to 97,320 yen.
Sony climbed 1.22 percent to 11,990 yen. Toyota dipped 0.03 percent to 8,410 yen while Honda was up 1.32 percent to 3,059 yen.
The dollar fetched 105.10 yen in early Asian trade, against 104.91 yen in New York late Friday.
Hong Kong, China | AFP | Monday 2/15/2021 – 09:00 UTC+9 | 16 words
Financial markets in China, Hong Kong, and Taiwan are closed on Monday for public holidays.