Photo taken on Jan. 9, 2021 shows pedestrian wearing face masks walking across a road in Tokyo, Japan. (Xinhua/Du Xiaoyi)
Despite positive growth in consumption and investment, the momentum of economic recovery has been suppressed, falling short of expectations, under the impact of repeated COVID-19 outbreaks and surging living costs in the country.
TOKYO, Feb. 16 (Xinhua) -- According to preliminary data released by the Japanese Cabinet Office, Japan's real gross domestic product (GDP) expanded 1.1 percent in 2022, much smaller than a 2.1 percent increase in the previous year.
Due to multiple adverse factors, Japan's economic growth last year fell short of market expectations and remained at a low level.
In December 2021, when the Organization for Economic Cooperation and Development released its economic outlook on Japan, it believed that the country could achieve steady expansion after having emerged from recession in 2021, with a potential economic growth of 3.4 percent in 2022.
Photo taken on Jan. 9, 2021 shows people walking past closed restaurants in Tokyo, Japan. (Xinhua/Du Xiaoyi)
However, as a result of a combination of uncertainties over the global economic outlook, Japan's economy remained sluggish in 2022, with negative growth in the first quarter and the third quarter, and its GDP has yet to return to pre-pandemic levels.
For the full year, private consumption, which accounts for more than half of Japan's GDP, grew by 2.1 percent. Corporate capital investment and exports of goods and services expanded 1.8 percent and 4.9 percent, respectively.
Despite the positive growth in consumption and investment, the momentum of economic recovery has been suppressed, falling short of expectations, under the impact of repeated COVID-19 outbreaks and surging living costs in the country.
Japan's exports of goods and services grew significantly less in 2022 than the previous year, while imports in the same category saw a considerable expansion, due to the sharp depreciation of the yen, which dragged Japan's economic growth.
While Japan's domestic demand added 1.7 percentage points to GDP growth, the contribution of external demand to the economy fell into negative territory over the year with negative 0.6 percentage points.
Photo taken on Feb. 2, 2021 shows shops closed earlier than usual in Ginza district in Tokyo, Japan. (Xinhua/Du Xiaoyi)
Japan's delayed economic recovery was believed to be dragged down in 2022 mainly by the following three factors.
First of all, the central banks of developed countries in the United States and Europe such as the Federal Reserve rapidly tightened monetary policies, and the Bank of Japan had to maintain its ultra-loose monetary policy due to the domestic economic situation.
Since 2022, the country has continued to face the pressure of currency depreciation and rising import costs. In addition, the Ukraine crisis has kept international commodity prices high, further amplifying the impact of yen's devaluation on the economy.
Secondly, repeated waves of COVID-19 pandemic significantly affected the Japanese consumer sector, and when commodity prices continued to spike and real wages dropped instead of increasing, it has begun to dent consumer sentiment.
Thirdly, due to the slowdown of overseas economies and the decline in demand in Europe, the United States and other countries, many export industries that are of great significance to Japan's economic growth have been suppressed, dragging down the contribution of exports to the economy.
Photo taken on Jan. 22, 2021 shows closed shops in Tokyo, Japan. (Xinhua/Du Xiaoyi)
In the final quarter of 2022, Japan's economy averted recession with an annualized real 0.6 percent increase from the previous quarter but rebounded much less than expected as business investment slumped. Capital spending in October-December fell 0.5 percent, adding to the fears of a global economic slowdown that many experts believe will not be optimistic in 2023.
Nomura Research Institute researcher Takahide Kiuchi said that the current headwind of price rises exceeding wage growth will persist, and the decline in multiple indicators in the fourth quarter of last year pointed to a grim economic situation overseas.
Japan's economy is highly dependent on external demand, and the growth rate is likely to fall below 1 percent in fiscal 2023 if overseas economies worsen, he added.■
