After more than two years under the strictest border controls in the world, Japan is once again open to business. The tourist spots are packed. The hotel is booked in advance. And it’s getting harder and harder to get a seat at many of the country’s best restaurants.
While that’s not ideal for many people flocking to Japan in late 2022 hoping to experience the country’s renowned hospitality, it’s pretty good for Japanese businesses.
The country’s economy, the world’s third-largest after the United States and China, grew at an annual rate of 0.6 percent from October to December, government data showed on Tuesday. The modest gain, fueled by a recovery in personal consumption and visitor spending to Japan, slowed growth expectations of possibly 2%.
The increase follows an unexpected drop in the third quarter of last year, when inflation and a weak yen pushed up import prices and curbed spending.
The latest quarterly results ended a second straight year of Japanese economic growth, which has charted a slow and sometimes uneven path to recovery following the economic devastation of the coronavirus.
Government data shows that Japan’s economy expanded in 2022 by 1.1% in real terms. That follows 2.1% growth in 2021.
Although Japan has now regained what was lost during the pandemic, its growth rate lags behind other countries, as lingering concerns about Covid continue to keep people indoors. indoors and limit demand.
Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research and Consulting, said: The growth recovery in the fourth quarter was partly due to the recovery in domestic consumption.
A big reason for that is that the Japanese people, with the encouragement of the government, have begun to adapt to life with the corona virus. While death has shot up to them highest level Since the pandemic began, many people in Japan have let their guard down.
“Constrained demand has been steadily increasing,” said Mr. Kobayashi. That recovery has been helped by the return of popular government subsidies that encourage people to travel and eat out.
Saisuke Sakai, senior economist at Mizuho Research and Technologies, said that with tourists flocking to the country, the weakness in the yen also becomes a positive for some business sectors to benefit. from their return.
“Tourism has recovered faster than expected and there is “revenge spending by people waiting for the coronavirus to pass,” he said, noting that the cheap yen has encouraged visitors to spend. aggressively for products such as makeup and luxury goods.
Not all news is good. The weak yen has continued to push up food and energy prices, both of which are heavily dependent on imports. Inflation was 4 percent in December, the highest level in more than 40 years. That greatly reduces wages that have risen little in decades.
Mr. Kobayashi sees more room for the economy to expand as Chinese tourists start to return in greater numbers. Japan has placed some restrictions on visitors from China over concerns about an increase in coronavirus cases in the country since the end of the country’s “Covid 0” policy.
Despite some concerns that the US or Europe could enter a recession this year, Mr. Kobayashi expects that “demand will continue to lead to modest growth for a while” in Japan. .
Takahide Kiuchi, executive economist at Nomura Research Institute, said many of his Japanese colleagues believe the Japanese economy could expand faster than that of the United States or Europe this year, as consumption continue to recover.
But for his part, he is less optimistic about Japan’s prospects.
“External factors could weaken the growth momentum of the Japanese economy,” he said, pointing to the uncertain economic situation abroad.
“Personally, I think the Japanese economy may fall into a slight recession by the middle of this year.”
