Japan's Household Spending Contracts For Third Consecutive Month

Japan’s Household Spending Contracts For Third Consecutive Month

Posted Tuesday, April 6, 2021 by
Arslan Butt • 1 min read

Household spending across Japan posted a decline for the third consecutive month during February, on account of fresh restrictions imposed by the government to tackle the latest wave of coronavirus infections. Data released by the government earlier today reveals that household spending fell by 6.6% in February, worse than the 6.1% drop seen in January.

The figure also came in worse than economists’ forecast which was for a decline by 5.3% instead. On a monthly basis, however, household spending rose by 2.4% since January, which was less than economists’ expectations for a 2.8% gain but far better than the 7.3% MoM change seen in the previous month.

The fresh spike in cases across Tokyo and some other parts of Japan has kept spending under pressure and is expected to drive a contraction in the economy during the first three months of 2021. The most affected has been the services sector, especially restaurants and hotels.

However, in the current quarter, the world’s largest economy could experience some respite on the back of improving external demand which could power recovery from the crisis. However, consumption levels could remain weak for some more time to come – a concern that has affected Japan even before the pandemic struck.

The extended damage driven by the pandemic has forced Japan’s ruling party executive to hint at a possible supplementary budget that can help support the economy. Despite massive stimulus efforts rolled out by the government and central bank, multiple waves of the pandemic have impeded recovery and continue to weigh on the economy.

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