After two years of contraction, the Japanese economy grew again last year.

According to preliminary calculations by the statisticians, real gross domestic product, i.e. adjusted for price changes, increased by 1.7 percent.

In 2020, economic output fell by 4.5 percent in the first year of the pandemic and by 0.2 percent in 2019.

Patrick Welter

Correspondent for business and politics in Japan based in Tokyo.

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The economic recovery over the past year has not been strong enough to offset the damage caused by the pandemic.

On average for the year, gross domestic product was still almost 3 percent lower than in 2019, the year before the pandemic.

In the first quarters, Japan coped better economically with the comparatively moderate corona waves than many countries in Europe or America.

But now it is becoming apparent that the country is finding it difficult to emerge from the pandemic with momentum.

With a growth rate of 1.7 percent, the third-largest economy ranks at the bottom of the five economically largest countries in the second year of the pandemic.

The United States had reported growth of 5.7 percent for the past year, China 8.1 percent, Germany 2.7 percent and the United Kingdom 7.5 percent.

Up to the fifth wave of infection

The decisive factor for the only moderate growth in the past year was that consumers were significantly restrained in their consumption during the pandemic waves and private investments shrank for the second year in a row.

The economy alternated between contraction and growth from quarter to quarter.

At the beginning of 2021 and during the Tokyo Olympics in July/August, the country experienced the fourth and fifth waves of infections.

Accordingly, private consumption fell, while increasing in the second and fourth quarters.

According to preliminary calculations, the economy grew by 1.3 percent in the period from October to December, when the government lifted the restrictions in public life, which were moderate compared to Europe, with a significantly increased vaccination rate and a drastic reduction in corona infections to almost zero compared to the previous quarter.

The main reason for this was again the growth in consumption, while private investments in fixed assets increased only moderately and real estate construction shrank.

This year began for Japan with the omicron wave and renewed restrictions on restaurants and large public events in many regions of the country.

Travel within Japan is also only moderate because concerns about the virus are holding back tourists and business people.

Most economists in Japan expect weak growth of 0.4 percent at the beginning of the year.

Unlike many Western countries, the Japanese economy entered the pandemic weakened.

An increase in consumption tax in autumn 2019 caused economic output to shrink sharply.