Japan’s Covid-19 surge risks deflation relapse

SEOUL – The idea of a “K-shaped” recovery has gained loads of attention in the Covid-19 era. It’s when the wealthy get richer and things get worse for those in all tiers below.

Along comes Japan to customize this dreaded scenario: Covid-19 infections surging, while the deflation Tokyo worked hard to defeat these last eight years is trending downward, and worrisomely so.

These divergent trends throw cold water on the theory – or hope, in some quarters – that Japan might be following China into the economic recovery room.

Gross domestic product reports are always ancient history by the time they hit the tape. But Japan’s batch of numbers – which bounced back to the 5% range in the third quarter – take this economic truism to entirely new levels as Covid-19 cases go on an unwelcome resurgence.