Nikkei hits 30 years as Japan’s economy bounces back better than expected

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That Nikkei 225 (N225) index rose 1.9%, crossing the 30,000-point threshold for the first time since August 1990, according to data provider Refinitiv Eikon.
Stocks rose sharply across the country sent stronger-than-expected GDP figures, with the economy projected to be 3% in the October-December period compared to the previous quarter. This corresponds to an annual rate of 12.7% and was much higher than analysts expected.
Overall, Japan’s economy fell 4.8% last year, less than 5.3% which the International Monetary Fund had Forecast. By comparison, the US economy decreased by 3.5% in 2020, while Germany saw its GDP contract with approx. 5%.

“The fixed [performance] confirms that the economy continued to recover from its pandemic-induced decline, ”wrote Stefan Angrick, senior economist at Oxford Economics, in a research note.

“However, high-frequency data show that momentum began to decline in December in the middle of a pickup in Covid-19 cases.”

Japan suffers from the worst GDP fall on record, but it did better than others
Japan is at the moment struggling with another wave of coronavirus infections, which has prompted the government to impose one state of emergency in parts of the country.

Angrick said he expected the measures “would put back, but not derail, the recovery in 2021, especially since an early lifting of restrictions seems likely.”

Japan has also just given its first approval for a coronavirus vaccine, giving the green light to the Pfizer-BioNTech shot. Sunday’s news spurred further hopes that the recovery could pick up speed.

“At this stage, Japan’s prospects look more favorable and downside risks are beginning to fade. Not only are local cases from the third wave past their peak, but the approval of the Pfizer vaccine is a significant development that will enable vaccination. to begin later in the week, “said Shahana Mukherjee, an economist at Moody’s Analytics.

“We maintain a cautiously optimistic view of Japan’s recovery in 2021, provided the vaccine drive takes place without much interruption,” she told CNN Business.

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Japan is not the only country to report better GDP data. On Monday, both Thailand and Singapore released solid new figures that helped build investor confidence, according to Jeffrey Halley, senior Asia-Pacific market analyst at OANDA.

Other markets around the region also rose on Monday with South Korea Kospi (KOSPI) index climbing 1.5%. Markets in Singapore, Malaysia, Indonesia and Australia also rose, while exchanges in China and Hong Kong were closed for the New Year holiday.

“The underlying picture is one of a growing recovery in … Asia [outside of China], “Halley wrote to clients. “The optimistic tone is likely to continue into Europe unless we get some negative headline surprises.”

The FTSE 100 gained 1.4% in early trading in London. Germany’s DAX rose 0.4% and France’s CAC 40 added 1.1%.

CNN’s Junko Ogura in Tokyo contributed to this report.

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