Japan’s Economy: Monthly Outlook (Nov 2021)

Economic outlook revised; Personal consumption heading for full-scale recovery with easing of restrictions on activities

  • Keiji Kanda
  • Wakaba Kobayashi
  • Yutaro Suzuki
  • Kazuma Kishikawa
  • Yuki Seto


◆In light of the announcement of the Jul-Sep 2021 GDP 1st preliminary results, we have revised our economic outlook. We now see Japan’s real GDP at +3.1% in FY2021, with FY2022 at +3.6%. According to our main economic scenario, the situation of COVID-19 infections is expected to remain stable due to the effectiveness of the vaccine and the spread of oral medicines.

◆Personal consumption will likely recover centering on services now that restrictions on activities have eased up. The effects of additional economic measures are expected to appear focusing on the first half of 2022, and the emergence of pent-up demand for motor vehicles, estimated at around 0.6 tril yen, will also boost the economy. Although the burden on households will increase due to high resource prices, excess savings of over 40 tril yen will reduce the negative impact on personal consumption. However, it should be noted that the effects will be especially large in the case of low-income households.

◆The greatest downside risk to Japan’s economy continues to be the spread of mutant strains of COVID-19. If a mutant strain that reduces the severity prevention effect of the vaccine spreads in Japan and overseas, most countries will likely impose tough restrictions on activities, which could cause economic activity to stagnate again.

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