Japan pandemic-hit economy returns to growth July-September

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People take elevators at a shopping building in Tokyo Monday, Aug. 24, 2020. Japan's economy grew at an annual rate of 21.4% in the last quarter in a recovery from the shocks of the pandemic driven by both private spending and exports. (AP Photo/Eugene Hoshiko)

TOKYO – Japan's economy grew at an annual rate of 21.4% in the last quarter in a recovery from the shocks of the pandemic driven by both private spending and exports.

The world’s third largest economy had logged three straight quarters of contraction and was already in recession by the time the crisis hit. Preliminary data from the Cabinet Office released Monday show a distant road to a full recovery.

News that the economy returned to growth in the July-September quarter sent share prices higher in Tokyo. About an hour after the market opened the Nikkei 225 index was up 1.6%.

Japan, like the rest of the world, is suffering from the slowdown brought on by business closures, plunging tourism and travel and social distancing measures for COVID-19.

On a quarterly basis, the economy grew 5.0%. The annual rate measures how much the growth would have been if that had continued for a year.

The data showed improvements in private consumption, the main driver of growth, and exports, including vehicles and auto parts. The rebound was expected, although analysts warn it won’t be enough to mark a return to normal.

The economy shrank 8.2% in the April-June quarter; 0.6% in January-March and 1.8% in October-November 2019, according to Monday’s data. Growth was flat in July-September 2019, underscoring stagnant conditions even before the pandemic.

“The Japanese economy for July-September 2020 is still in a severe situation due to the COVID-19, but it is showing movements of picking up later in the quarter,” the government said in a statement.