Falling coronavirus cases boosted consumption in the final three months of 2021, but rising raw material costs and a surge in new Omicron variant infections cast doubt on the prognosis.
Increasing tensions in Ukraine, according to Bank of Japan Governor Haruhiko Kuroda, pose a new risk to the central bank’s prognosis for a moderate economic rebound.
The world’s third-largest economy grew by an annualised 5.4 percent in October-December after declining by a revised 2.7 percent the previous quarter, according to government statistics released on Tuesday, falling short of a median market projection of a 5.8% growth.
According to some economists, the economy will continue to contract in the current quarter as mounting COVID-19 cases discourage consumers from spending and supply chain disruptions crimp industry output.
“Depending on how the Omicron variation affects service-sector demand, the economy would likely halt or even decrease in January-March,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
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