© Reuters. FILE PHOTO-A woman in a traditional costume makes her way at a shopping district in Tokyo, Japan November 15, 2022. REUTERS/Kim Kyung-Hoon
By Tetsushi Kajimoto and Leika Kihara
TOKYO (Reuters) – Japan’s economy rebounded in October-December from the previous quarter’s contraction, data showed on Tuesday, a sign the country was finally making a delayed recovery after the scars of the COVID-19 pandemic.
But the increase was much smaller than forecast, suggesting the global economic slowdown may be taking a toll on the country’s export-reliant recovery.
The world’s third-largest economy expanded an annualised 0.6% in the final quarter of last year, government data showed, rebounding from a revised 1.0% contraction in July-September.
The increase in gross domestic product (GDP) was much smaller than a median market forecast for a 2.0% rise.
Private consumption, which accounts for more than half of Japan’s gross domestic product (GDP), rose 0.5% in the fourth quarter, matching a median market forecast.
External demand added 0.3 percentage point to growth. Analysts expected a 0.4 point contribution.
Japan has seen an increase in the number of overseas visitors since ending in October some of the world’s strictest border controls to prevent the spread of the COVID-19 pandemic.
Policymakers hope a rebound in domestic consumption, driven by savings accumulated during the pandemic, will last long enough for wages to pick up and cushion the blow on households from rising food and fuel costs.
With inflation exceeding the Bank of Japan’s 2% target, the outlook for the economy and wages will be key to how soon the central bank could phase out its massive stimulus programme.