Japan's economy likely rebounded in Q4 on solid consumption: poll

[TOKYO] Japan's economy likely rebounded in the final three months of 2021 as consumption rose during a drop off in Covid-19 cases, a Reuters poll showed, though it could slide back into contraction this quarter after a spike in Omicron variant infections.

The poll also showed wholesale prices continued to rise in January from a year earlier, a sign higher energy and raw material costs will keep eroding corporate profits.

The world's third-largest economy likely grew an annualised 5.8 per cent in October-December, rebounding from a 3.6 per cent contraction in the third quarter, according to a median forecast of 18 economists polled by Reuters.

The increase was driven largely by a 2.2 per cent rise in private consumption, which accounts for more than half of Japan's gross domestic product (GDP), the poll showed.

Capital expenditure likely gained 0.5 per cent, while external demand added 0.3 per cent point to GDP growth in October-December after neither adding nor shaving off the previous quarter's figures, the poll showed.

"Japan's economy clearly turned up in October-December, as foot traffic recovered thanks to the lifting of Covid-19 curbs and falling infection cases," said economists at SMBC Nikko Securities.

Separate data will likely show wholesale prices rose 8.2 per cent in January from a year earlier, slowing for the second straight month but still hovering near the record 9.0 per cent hit in November, the poll showed.

Household spending likely rose 0.3 per cent in December from a year earlier, marking the first rise in five months, the poll showed.

The government will release preliminary October-December GDP data at 8.50 am on Feb 15 (2350 GMT, Feb 14) and household spending data at 8.30 am on Feb 8 (2330 GMT, Feb 7).

The Bank of Japan will release the wholesale price data at 8.50 am on Feb 10 (2350 GMT, Feb 9).

The government reinstated coronavirus curbs in most areas in Japan, and local authorities are mulling over even stricter restrictions to stop the fast spread of the Omicron variant.

On Thursday, Japan's daily infections exceeded 100,000 for the first time. REUTERS