Japan leads economic ‘Zoom boom’ out of recession

Japan’s
economy has bounced back from its recession with growth of 5% in the third
quarter of this year.

It had seen its economy shrink during
2020 as lockdowns hit its manufacturing sector and consumer spending.

The world’s third biggest economy is
now showing signs of recovery according to gross domestic product (GDP) data
released on Monday.

Asian economies are leading the way
for a global economic recovery, in what analysts are calling a “Zoom
boom”.

This refers to the increase in demand
for screens and laptops as more people work from home, and use online meeting
platforms like Zoom.

Asian economies are among the largest
producers of laptops, communication equipment and other electronics.

A rise in domestic demand as well as
exports have helped drive economic growth in Japan.

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The Asian region will also get a
boost after signing up to a mega trade deal agreed over the weekend, called the
Regional Comprehensive Economic Partnership (RCEP).

Other signatories include China,
South Korea, Australia and Singapore.

Japan’s third-quarter growth of 5%,
covering July to September, is compared to the previous quarter, which saw its
economy shrink 8.2%.

This turnaround is the fastest pace
on record for Japanese economic growth. At an annualised rate, assuming this
growth continued for 12 months, it represents expansion of 21.4%.

GDP for the second quarter, covering
April to June, was Japan’s worst figure since data became available in 1980 –
worse than that of the 2008 global financial crisis.

The bounceback is welcome news for
Japan’s government which has avoided the tough lockdown measures seen in some
other countries.

The global economy as a whole is
expected to contract by 4.4% this year, while the US will shrink by 4.3%,
according to the International Monetary Fund.

However, Asian economies are leading
the way when it comes to showing signs of recovery. China remains on track to
grow by about 2% this year, the most of any major economy.

Vietnam is also expected to grow
1.6%.

“We call it the Zoom boom,”
said Rory Green, an economist at research firm TS Lombard.

Suga-coated

Earlier this year, Japan unveiled two
stimulus packages worth a combined $2.2tn (£1.7tn), including cash payments to
households and small business loans.

Prime Minister Yoshihide Suga, who
took over in September, has also instructed his cabinet to come up with another
package to boost Japan’s pandemic-hit economy.

Despite this latest quarterly growth,
the Japanese economy is still expected to shrink by 5.6% for its full fiscal
year, which ends in March 2021.

-BBC-