TOKYO: A new wave of coronavirus illnesses and a sluggish vaccination rollout are weighing on consumer confidence in Japan, according to a Reuters poll released on Friday. According to a Reuters survey of 16 analysts, data from the Internal Affairs Ministry due at 8:30 a.m. on Tuesday (2330 GMT Monday) is projected to show that total household spending increased 10.9 percent year on year in May, down from 13.0 percent the previous month.
It would be the third month in a row of improvements, though those gains are inflated by the dramatic contrast with last year’s pandemic-induced drop.
On a seasonally adjusted basis, household expenditure declined 3.7 percent in May, the first drop in four months, according to the poll. (For more information, see to https://apac1.apps.cp.thomsonreuters.com/Apps/econ-polls?RIC=JPALLSper cent3DECI household spending statistics.) A slowdown in household spending would worry the Bank of Japan (BOJ), which will examine recent economic indicators at its policy-setting meeting on July 15-16, when it will provide growth and inflation forecasts. “Self-restraint in service consumption, including as traveling, dining, and drinking, has remained since late April as the state of emergency (to combat COVID-19 infections) was extended,” said Takeshi Minami, head economist of Norinchukin Research Institute.
“While year-over-year data are likely to have improved from last year, month-over-month figures are almost certainly negative.”
The world’s third-largest economy shrank by 3.9 percent on an annualized basis in January-March, and is only expected to recover moderately in the second quarter due to the emergency measures.
While many restrictions have been lifted, Japan’s capital and three neighboring prefectures are still under a ‘quasi’ state of emergency that will last until July 11, according to reports, and officials are leaning toward leaving the restrictions in place due to an increase in illnesses.
Even if these restrictions are eased, many analysts believe that consumption will continue to be a weak point in Japan’s export-led economy, as sluggish vaccination rollouts make consumers apprehensive of increasing spending.
The survey also showed that statistics from the Ministry of Finance (MOF) due out at 8:50 a.m. Thursday (2350 GMT Wednesday) is projected to show a surplus of 182.04 billion yen (US$1.63 billion) in May, compared to 132.18 billion yen the previous month.
(1 US dollar = 111.5900 yen)
(Tetsushi Kajimoto contributed reporting; Kim Coghill edited the piece.)/n
