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In the midst of the coronavirus illness (COVID-19) pandemic, a guy wearing a protective face mask walks down a neighborhood retail street in Tokyo, Japan, on May 5, 2021. REUTERS/File Photo/Kim Kyung-Hoon (Reuters) – TOKYO, July 14 (Reuters) – According to a Reuters poll, Japan’s economy would develop at a slower pace in the third quarter than projected, as further coronavirus emergency measures in Tokyo, which will last through the Olympic Games, impact on consumption. Analysts, on the other hand, projected growth picking up in the fourth quarter, with the majority anticipating a “strong” or “very strong” boost from pent-up demand in the second half of the year, indicating a stronger prognosis. According to a poll of over 40 analysts conducted between July 2 and 13, the world’s third-largest economy is predicted to grow at an annualized 4.2 percent this quarter, down from a 4.8 percent expansion forecast last month. Economists also reduced the second quarter’s annualised growth to 0.4 percent from 0.5 percent. “The Tokyo state of emergency would almost certainly have a significant impact on consumption,” said Nobuyasu Atago, head economist at Ichiyoshi Securities. “Pent-up demand is likely to materialize later than expected. The anticipated consumption improvement in July-September has been pushed back to the fourth quarter.” The government of Japan declared a fresh state of emergency in Tokyo this week, which will remain until August 22 – or through the Olympic Games, which run from July 23 to August 8. This has fueled fears of a long-term impact on pubs and restaurants, which are being ordered to work fewer hours. Due to the significant toll the health crisis is taking on domestic demand, particularly for services like as tourism, dining out, and other leisure activities, Japan’s economy has struggled to create a convincing rebound this year. After an annualized 3.9 percent contraction in the January-March period, the government will disclose its second-quarter gross domestic product estimate on Aug. 16. find out more The median poll forecasted that the economy will expand by 4.6 percent on an annualized basis in the fourth quarter, slightly higher than the 4.4 percent expansion forecasted last month. The current and next fiscal years’ growth forecasts were maintained unchanged at 3.6 percent and 2.6 percent, respectively. The poll found that core consumer prices, which exclude volatile fresh food costs, will rise only 0.3 percent this fiscal year, up from 0.2 percent predicted last month. REBOUNDING SPENDING The economic risks posed by the health-care crisis have pushed politicians from the ruling party to call for more stimulus spending to boost growth. find out more Despite the fact that Japan’s immunization program is getting back on track after a slow start, all analysts see a comeback of diseases as the largest threat to the country’s economy this year. However, about 60% of analysts predicted that the boost to Japan’s economy this year from pent-up demand and saved during the COVID-19 crisis would be “strong” or “very strong,” which is a positive indication. That was higher than the 40% of analysts who predicted it would be “weak,” as well as the one forecaster who said it would be “extremely weak.” “It’s likely that the (consumption) rebound would be quite significant from September to November,” said Masamichi Adachi, UBS Securities’ chief economist for Japan, but he added that consumption may not rise much more next year. At its policy meeting on July 15-16, respondents were united in their prediction that the Bank of Japan (BOJ) would maintain its short-term interest rate goal of -0.1 percent and its 10-year bond yield objective of about 0 percent. The BOJ’s next policy step is projected to be an unwinding of stimulus, according to over 90% of analysts polled, though they were split on what the central bank may do if it were to finally tighten its policy framework. The most frequently expected alternatives, according to the survey, were for the BOJ to tweak its forward guidance, boost the 10-year yield goal, or abandon its negative rate policy and hike short-term interest rates. (See Reuters’ global economic poll for more stories.) Daniel Leussink contributed reporting; Kaori Kaneko contributed further reporting; Md. Manzer Hussain and Sujith Pai polled in Bengaluru; Ana Nicolaci da Costa edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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