Japan's Economy Likely To Contract In Q1, Gdp To Fall 0.8 Pct - Moody's Analytics

KUALA LUMPUR, May 17 (Bernama) -- Preliminary figures will likely show that Japan’s economy contracted in the first quarter of 2021 (Q1), with Gross Domestic Product (GDP) forecast to fall by 0.8 per cent quarter over quarter, following the 2.8 per cent expansion in the fourth quarter of 2020 (Q4 2020), said Moody’s Analytics.  The nation’s domestic demand will remain the laggard, while exports will be the bright spot, it said. “Household consumption was hurt by emergency measures introduced to curtail rising COVID-19 infections in large prefectures. “The country has struggled to contain local infections, and its vaccination drive has been relatively slow, with less than one per cent of the population having already received both shots,” it said in a note on Asia Pacific weekly highlights. Moody’s Analytics said although Japan’s exports have performed well of late, export demand is not enough to completely offset the renewed weakness at home. It said seasonally adjusted exports rebounded in March 2021 with a 4.5 per cent month-over-month expansion, following the 4.8 per cent decrease in February. “Japan's export engine performed well in the final months of 2020, and that was a key driver of its better-than-expected December-quarter GDP data.” Meanwhile, Moody’s Analytics shared China’s monthly data barrage for April will also be a highlight, with industrial production, fixed asset investment, and retail trade all due for release. “We expect that annual comparisons will continue at a blistering double-digit pace because of low base effects from 2020, when the economy was still amerced by the pandemic and economic activity was severely slowed,” the research firm said. Although seasonally adjusted monthly comparisons are not readily available, it said April data is expected to show decent expansions across the board as the economy is largely back on its feet and demand from its trading partners has picked up along with their respective vaccination drives. Pressure points have also emerged, most notably from high input costs due to elevated commodity prices, and this is starting to squeeze margins, some of which is being passed down to the consumer, it said. As for South Korea, it highlighted that the country’s job market recovery strengthened further in April, as the seasonally adjusted unemployment rate fell to 3.7 per cent from 3.9 per cent in March. Moody’s Analytics said employment grew by 2.5 per cent over the year, marking the strongest yearly increase in seven years. “The yearly increase, while sizeable, was inflated given the severe hit from COVID-19 restrictions which undermined economic activity in April 2020. “Employment in absolute terms improved for the third consecutive month this year, as nearly 67,000 new jobs were added to the market in April, building the gains from March, signalling that South Korea’s employment recovery is gaining momentum,” it added. -- BERNAMA