Economists polled by Reuters expect the Japanese economy to contract at a slower pace than previously forecast during the current fiscal year, supported by a recovery in exports. The latest edition of the Reuters poll forecasts a contraction of 5.6% this fiscal year for Japan’s trade-reliant economy, better than the 6% contraction forecast previously.

The improved economic forecast comes on the back of a stronger than expected rebound in GDP between July and September, when the economy grew by 18.9%. The GDP received a boost in the previous quarter as a result of a pick-up in both domestic consumption as well as exports.

However, economists caution that the recent second wave of the pandemic currently underway in Japan and several parts of the world could hold back economic recovery in Japan in the present quarter. For now, the forecast is for a growth of 3.7% in the current quarter and a growth of 2.8% between January and March 2021.

In the next fiscal year, Japan’s economy is expected to grow by 3.4% – the same pace as forecast in the previous edition of the poll. So far, the Japanese government has already rolled out stimulus measures worth $2.2 trillion and is expected to unveil more stimulus soon to offset the economic damage caused by the coronavirus pandemic.