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Japan’s Economy: Monthly Outlook (Nov 2020)

Economic outlook revised: while recovery continues, concerns regarding explosive spread of infections increases

Keiji Kanda

Akane Yamaguchi

Munehisa Tamura


◆In response to the Jul-Sep GDP 1st preliminary results, we have revised our economic outlook. We now see Japan’s real GDP at -5.5% in FY2020, with FY2021 at +3.2%. Jul-Sep period real GDP won significantly positive growth, but the pace of recovery is expected to remain moderate in the Oct-Dec period and beyond. Our main scenario sees the unemployment rate shifting into a decline after peaking around the end of CY2020, with 3.0% expected in CY2021.

◆Explosive spread of COVID-19 infections has been recorded recently, and possibilities that a declaration of a state of emergency and lockdown orders as occurred during the months of April and May this year will be unavoidable are increasing rapidly both in Japan and abroad. Our risk scenario is based on the assumption that explosive spread of COVID-19 infections will occur twice in Japan, the US and Europe in the first and second halves of CY2021. In this case, the CY2021 real GDP growth rate will decline from +2.0% as seen in the main scenario to -0.8%, with the unemployment rate increasing to 4.9%. This outlook for the employment rate assumes that there will be an extension of measures to expand employment adjustment subsidies and other support measures. If measures to support corporations are not implemented, a major increase in the unemployment rate of more than 6% could occur.

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