Note: This report includes forecasting data that is based on baseline historical data.
Summary
Japan confirms first case of omicron that passed quarantine inspection on December 12, 2021
The cumulative COVID-19 death toll in Japan topped 20,000 In on February 11, 2022, with the figure growing in recent weeks amid the sixth wave of infections, driven by the highly transmissible omicron variant
After witnessing a decline in economic growth in Q3 2021, Japan is poised for a firmer recovery in Q4, which should continue into next year.
| Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Recovery Index | 91.1 | 83.7 | 87.3 | 89.1 | 88.5 | 90.1 | 91.9 | 93.8 | 95.4 | 96.9 | 98.2 | 99.5 |
| Economic Activity | 98.1 | 90.3 | 95.0 | 97.2 | 96.8 | 97.2 | 97.4 | 97.8 | 99.2 | 99.8 | 100.3 | 100.8 |
| Employment | 100.1 | 99.4 | 99.5 | 99.6 | 99.8 | 99.6 | 99.6 | 99.5 | 99.5 | 99.5 | 99.6 | 99.7 |
| Consumer Spending | 97.2 | 89.2 | 93.7 | 95.9 | 94.9 | 95.7 | 95.8 | 96.0 | 97.7 | 98.4 | 98.8 | 99.4 |
| Retails Sales | 97.4 | 91.9 | 97.8 | 99.7 | 98.3 | 98.6 | 97.8 | 98.0 | 99.1 | 99.7 | 100.3 | 100.8 |
| Consumer Confidence | 27.8 | 4.8 | 4.8 | 7.1 | 8.5 | 22.1 | 44.1 | 58.6 | 64.4 | 74.9 | 84.6 | 93.9 |
COVID-19 measures
According to earlier data from the health ministry, 84% of the deaths were people in their 70s or above. Meanwhile, there were 27 deaths among those in their 20s and four among those age 10 to 19.
Tokyo, Osaka and 33 other prefectures have been under a COVID-19 quasi-emergency, under which dining establishments are asked to shorten business hours and people to refrain from nonessential travel between prefectures.
Consumer spending likely continued its recovery into Q4 after reversing declines in September.
Prime Minister Fumio Kishida's party retained its majority in the lower house of the Diet (parliament), which should support additional fiscal stimulus measures. These measures ought to boost consumer spending as they should include cash transfers to families and a moratorium on consumption tax hikes that have restrained spending. Low inflation could also help consumer spending in the near term, but inflationary pressures are building relatively quickly. Six Japanese seafood buyers have applied and received National Interest Exemptions (NIE) allowing them to travel to Canada to advance business contracts during the COVID-19 pandemic. Another Japanese seafood buyer's NIE application is currently being assessed.
The new Prime Minister Kishida is more focused on reducing inequality and reviving the economy before restoring fiscal balance.
Economy
On November 19, 2021, Kishida's cabinet approved a larger-than-expected 55.7 trillion-yen fiscal stimulus package that will still need parliamentary approval. The package includes more funding for universities and digitalization of rural areas to raise productivity growth. It also includes money to raise semiconductor manufacturing capacity, which could improve the country's economic security.
After four months of consecutive declines, real household expenditures increased 5% between August and September despite states of emergency still in place in parts of the country.
Consumer confidence also continued to grow in October, rising 17% year over year (YoY).
While other advanced economies are concerned about the rising inflation, consumer price growth remains weak in Japan, with headline inflation up just 0.2% from a year ago in September. Japan was initially slow to vaccinate its population and kept large parts of the country under a state of emergency into September.
Despite some risks, Japan's economy is finally headed in the right direction. The new prime minister's economic agenda will boost consumer spending and could prop up productivity growth. As demand rebounds amid ongoing supply constraints, inflationary pressures will build. However, some of those supply constraints will likely begin to abate next year, preventing inflation from getting out of control. At the same time, manufacturing production and goods exports are expected to rebound as supply-chain constraints ease.
The consumer price index for Japan in December 2021 was 100.1 (2020=100), up 0.8% over the year before seasonal adjustment, and up 0.1% from the previous month on a seasonally adjusted basis.
The average of monthly consumption expenditures per household for December 2021 was 317,206 yen, up 0.7% in nominal terms but down 0.2% in real terms from the previous year. The average of monthly income per household stood at 1,102,091 yen, up 5.5% in nominal terms and up 4.6% in real terms from the previous year.
Trade
Data for 2021 (January to December): Canadian agri-food and seafood exports to Japan were valued at Can$5.2 billion in 2021 vs Can$4.9 billion in 2020, an increase of 6%.
Canada's top 5 agri-food exports to Japan in December, 2021 were canola seed (Can$1.6 billion), fresh/chilled pork (Can$977.6 million), non-durum wheat (Can$574.9 million), soya beans (Can$209.8 million) and frozen boneless beef (Can$182.8 million). Total exports in Dec. 2021 were valued at Can$416.9 million, an increase of 6% from Dec. 2020 at Can$394.6 million
Canada's top 5 seafood exports to Japan in 2021 were frozen crabs (Can$11.3 million), live, fresh or chilled, sea urchins (Can$2.1 million), frozen lobster (Can$1.9 million), frozen fish (Can$1.3 million), frozen lesser or Greenland halibut (Can$0.9 million).
Other recovery indicators
Food service and retail
The recovery of consumer foodservice in Japan is largely dependent on the successful rolling out of the country's vaccination programme, the reopening of its borders, and the ability of consumers to return to their pre-COVID-19 activities. Nevertheless, this is not expected to be achieved until 2022 in terms of the resumption of domestic and international travel, while in the short term at least many consumers are expected to continue working from home. Although the timing of the government's Go To Eat and Go To Travel campaigns were not ideal in 2020, the fact these campaigns have now been extended means they could play an important role in kick-starting a recovery. Following the outbreak of COVID-19, many operators opted to use cashless payments as they do not require direct contact.
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Resources
- The Japan Times, December, 2021, Japan confirms first case of omicron that passed quarantine inspection
- Deloitte (December, 2021), Japan: A final recovery is finally upon uscite>
- Global Trade Tracker, 2022
- Japan Times (February 11, 2022): Japan's COVID-19 death toll tops 20,000 as nation logs 98,000 new cases
- Euromonitor 2022
Customized Report Services – Japan recovery reporting
Global Analysis Report
Prepared by: Hongli Wang, Senior Market Analyst
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