TOKYO (Reuters) – Japan’s economy will suffer a much larger contraction than originally expected in the January-March quarter, as a state of emergency expands to physically injure the coronavirus pandemic and housing, a Reuters poll found.
A strong majority of analysts said whether Tokyo would continue with the Olympics this year with little impact on the economy either, as most major construction projects have already been completed and audience numbers may be limited.
The world’s third-largest economy is expected to decline by 5.0% annually in the current quarter, a February 1-10 poll of 37 economists showed a double-digit barrier of 2.4%. last month.
The decline is largely due to the government’s decision in January to impose renewed restrictions to counter a spike in infections in Tokyo and several other high schools.
“With the crisis, weak consumer spending proves to be a major slowdown in growth,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.
“The economy is expected to decline in the second quarter and grow thereafter, but at a moderate pace as the pandemic remains a threat.”
Analysts expect Japan’s economy to shrink 5.3% in the fiscal year ending in March before expanding 3.6% next year.
Consumer base prices, which exclude volatile fresh food prices, will fall 0.5% this fiscal year and grow just 0.2% next fiscal year, according to the election, unchanged from before -assessments made in the previous month.
More than half of respondents expected the Bank of Japan’s next policy move to be an incentive solution, although most do not expect this to happen until 2023 or later.
VICTORY OF OLYMPICS LIMITED
Adding to the uncertainty is the already delayed Tokyo Olympics as the government struggles to get vaccines warmed up for the slow progress in introduction of the pandemic.
As organizers prepare to hold the Olympics from July, nearly 80% of the Japanese population is opposed to holding the Summer Games as planned, recent censuses have shown.
Asked by what level the Olympics, if held, would push growth upwards in the next fiscal year beginning in April, 26 economists said – or 68% of the total pollination – would not be much energy.
Around 69% said the postponement of the Olympics would have little effect on the economy.
“Most of the Olympic-related business investment has already been made,” said Tetsuya Inoue, a lead researcher at the Nomura Research Institute.
The increase in consumption would be limited even if the Games go ahead as Tokyo would likely limit the number of spectators, he said.
(For more stories from the Reuters global poll on 🙂
Reciting with Kaori Kaneko; Voting by Shaloo Shrivastava, Editing by Leika Kihara and Sam Holmes