Japan recorded lower COVID-19 cases in November, leading its retail sales to rise thus encouraging shoppers to ramp up spending on goods and services.
The Japan Cabinet Office last week had passed a $317 billion extra budget to support the economy, that includes payouts to families and businesses hit by the pandemic. The government had also approved a highest $940 billion budget for fiscal 2022.
However, uncertainties around the new Omicron coronavirus variant are leading the prospects of a consumption-led recovery quite hazy. The COVID-19 variant has started to spread in the community last week in the country’s largest cities.
Dai-ichi Life Research Institute, senior economist, Masato Koike commented that so far, consumers haven’t been too concerned with the Omicron as foot traffic data is continuing to show an increase.
However, if new infections continue to rise rapidly, it may be possible that consumption will be suppressed by the Omicron at this point, whilst also adding that returning travellers during the holiday season could spread infections.
Retail sales data –
• Government reported November retail sales to have gained 1.9 percent from a year earlier, faster than economists’ median forecast for a 1.7 percent gain and the 0.9 percent advance in October.
• In the reporting month, fuel sales rose 29.9 percent from a year earlier, over soaring commodity prices, thus pushing up the overall retail trend.
• Car sales declined 14.1 percent due to supply bottlenecks.
• With diminishing demand for stay-at-home appliances, electronics sales also fell through 10.6 percent.
• The retail sales in the reporting month increased 1.2 percent on a seasonally adjusted basis, after a downwardly revised 1.0 percent rise in October.
The Japan government in September had lifted the COVID-19 restrictions nationwide as daily infection cases in the country fell to less than one per million people in December.
The country other than strict border controls to stop the spread of the new Omicron variant has not reinstated any restrictions yet.
According to Reuters poll, Japan’s economy in the current quarter is expected to rebound by an annualised 6.1 percent from a 3.6 percent fall in July-September.