TOKYO, Oct 15 (Businesshala) – Japan’s economy is likely to grow at a slower pace than last quarter and faces ongoing risks from rising raw material prices and production and supply disruptions linked to the coronavirus, Friday was shown by a Businesshala poll of economists.
Government and central bank policymakers are hoping a boom in consumer activity puts the export-dependent economy on a path of strength, as Japan sees a decline in COVID-19 case numbers and progress on vaccinations.
However, analysts warned of risks such as an unexpected economic slowdown in China and shortages of semiconductor chips and factory parts due to the pandemic.
“Supply chain disruptions are a long-term risk problem, adding to the pressure on the global economy,” said Harumi Taguchi, chief economist at IHS Markit.
Japan’s economy grew 0.8% annually in the third quarter, weakening from the 1.2% expansion projected last month, according to the average forecast by a survey of 39 analysts.
The survey showed that growth is expected to pick up to 4.5% in the quarter as the end of emergency restrictions boost consumption and corporate activity.
This estimate was broadly in line with last month’s forecast of 4.4% growth, as shown in the October 6-14 survey.
Parts shortages and factory disruptions in Southeast Asia have forced Japanese automakers to cut production in recent months, tarnishing the outlook for an export-dependent economy.
Japanese companies also face rising raw material costs, compounded by a weaker yen, which could reduce margins.
Mari Iwashita, chief market economist at Daiwa Securities, said rising input costs would worsen terms of trade for a major importer of raw materials such as Japan.
“This will lead to a reduction in corporate profits and real purchasing power for consumers,” Iwashita said.
The poll also showed that Japan’s new Prime Minister Fumio Kishida should focus on fighting the coronavirus pandemic, promoting the digitization of the economy, and stimulating domestic demand and consumption.
Kishida, who took over as prime minister from Yoshihide Suga earlier this month, called a general election on Thursday in which he hopes to tighten his grip on power.
Asked what areas the government should focus on under the new prime minister, 27 economists selected “response to the coronavirus pandemic”.
The next most popular choices were “digitization in society and among firms” and “stimulating domestic demand and private consumption”, which were chosen by 17 and 14 economists respectively.
Six economists chose “social security issues” such as the pension system and care for the elderly and children. Three analysts chose “foreign and security policy”, while none chose “fiscal reform”.
The survey allowed respondents to choose up to two areas.
(For other stories from the Businesshala Global Economic Poll)