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Japan's state of emergency seen triggering first-quarter economic contraction – TheChronicleHerald.ca

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By Leika Kihara

TOKYO (Reuters) – Japan’s likely decision to declare a state of emergency in the Tokyo area will most probably trigger a contraction in January-March, analysts say, adding to the headache for policymakers struggling to cushion the blow to the economy from the pandemic.

The world’s third-largest economy rebounded sharply in the third quarter last year from a record April-June slump caused by the pandemic, heightening expectations a moderate recovery.

But such hopes have been dashed by a resurgence in COVID-19 infections that have forced the government to consider imposing a state of emergency that could last about a month.

Media reported on Monday that preparations were being made for a state of emergency that would take effect by Friday.

While the restrictions will be far less sweeping than those during last year’s nationwide state of emergency, analysts expect them to inflict severe damage on consumption.

“There’s no doubt Japan’s economy will suffer a contraction this quarter,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“The question will be whether it’s a double-digit or a single-digit drop, which depends on how long the restrictions last and whether stronger curbs could be added.”

The current plan, unveiled by government officials this week, focuses on requests for restaurants to close early and for residents to refrain from non-essential outings in the evening.

BNP Paribas chief Japan economist Ryutaro Kono said he plans to slash his January-March forecast to an annualised contraction of around 2% from the current projection of a 0.2% increase.

Daiwa Institute of Research also expects the economy to shrink in January-March, even though it sees the hit to real gross domestic product (GDP) at less than 1 trillion yen ($9.7 billion) per month – one-third that from last year’s curbs.

“If the government is forced to impose longer and broader restrictions than the current plan, the risk of a double-dip recession rises sharply,” Daiwa economists wrote in a report.

In a Reuters poll last month, analysts had expected the economy to expand an annualised 3.9% in October-December last year followed by a 2.1% gain in January-March.

($1 = 102.8400 yen)

(Reporting by Leika Kihara; Editing by Raju Gopalakrishnan)

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Taiwan economy seen growing 3.61% in fourth quarter on boost from exports: Reuters poll – The Guardian

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TAIPEI (Reuters) – Taiwan’s economy is expected to have expanded 3.61% year-on-year in the fourth quarter, a Reuters poll showed, as the export-dependent island continued to shake off the coronavirus jolt with a return of strong shipments and consumer confidence.

The trade-dependent economy grew 3.92% in the third quarter from a year earlier, in a solid rebound from a 0.58% contraction in the second quarter.

Taiwan, a key hub in the global technology supply chain for tech giants such as Apple Inc, is expected to have posted slightly slower gross domestic product (GDP) growth of 3.61% on year in October-December, according to the poll of 14 economists.

Predications varied widely from growth of 2.1% to as high as 6.83%.

Exports in 2020 rose 4.9% to $345.28 billion, a record high by value for a single year.

In December, Taiwan’s central bank revised up its growth outlook for this year.

It raised its 2020 forecast for GDP growth to 2.58% from 1.6% predicted in September, and projected 2021 growth at 3.68%, compared with 3.28% seen at its last quarterly meeting.

Taiwan’s exports have benefited from the work-and-study from home trend around the world, which has boosted demand for laptops, tablets and other electronics made with components supplied by firms like Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Taiwan’s largest trading partner China registered faster-than-expected economic growth in the fourth quarter of last year, with GDP up 6.5% year-on-year.

Taiwan’s preliminary fourth-quarter figures will be released on Friday. Revised figures, including details and government forecasts, will be published about three weeks later.

(Poll compiled by Carol Lee; Reporting by Ben Blanchard; Editing by Shri Navaratnam)

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New coronavirus variants pose major risk to the global economy, IMF warns – CTV News

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The pandemic could slam the brakes on a global economic turnaround this year despite mass vaccination programs and unprecedented levels of stimulus, according to the International Monetary Fund.

The IMF expects the global economy to grow by 5.5% this year, it said on Tuesday, or 0.3 percentage points faster than its previous forecast in October. The upgrade reflects “expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies,” the group said. (The IMF estimates that the world economy shrank by 3.5% in 2020, its biggest peacetime contraction since the Great Depression.)

But it also warned that surging infections in late 2020, renewed lockdowns and logistical problems with vaccine distribution could hamstring growth. If new variants of the coronavirus also prove difficult to contain, global output this year would be 0.75% less than the IMF expects.

Looking further ahead, the IMF expects global growth to slow to 4.2% in 2022.

“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” Gita Gopinath, chief economist of the IMF, said in a blog post.

Some countries will recover more quickly than others. China, which was the only major economy to grow in 2020, is forecast to achieve growth of 8.1% this year. The United States should emerge from its deep slump to expand by 5.1%, a pace that’s 2 percentage points faster than the IMF predicted in October.

The 19 countries that use the euro are expected to see growth of 4.2% in 2021. The United Kingdom, which endured a 10% contraction last year as it left the European Union and is now battling a new coronavirus variant, would rebound with relatively modest growth of 4.5%.

“The wide divergence reflects to an important extent differences across countries in behavioral and public health responses to infections, flexibility and adaptability of economic activity to low mobility, preexisting trends, and structural rigidities entering the crisis,” the IMF said.

 

UNCERTAINTY REIGNS

 

The pandemic is causing “exceptional uncertainty,” according to the IMF.

“Although new restrictions following the surge in infections (particularly in Europe) suggest growth could be weaker than projected in early 2021, other factors pull the distribution of risks in the opposite direction,” the IMF said.

If the vaccine distribution and efficacy go smoothly, for example, output could exceed expectations by as much as 1% globally, with companies hiring and expanding capacity in anticipation of rising demand.

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New coronavirus variants pose major risk to the global economy – CNN

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The IMF expects the global economy to grow by 5.5% this year, it said on Tuesday, or 0.3 percentage points faster than its previous forecast in October. The upgrade reflects “expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies,” the group said. (The IMF estimates that the world economy shrank by 3.5% in 2020, its biggest peacetime contraction since the Great Depression.)
But it also warned that surging infections in late 2020, renewed lockdowns and logistical problems with vaccine distribution could hamstring growth. If new variants of the coronavirus also prove difficult to contain, global output this year would be 0.75% less than the IMF expects.
Looking further ahead, the IMF expects global growth to slow to 4.2% in 2022.
“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” Gita Gopinath, chief economist of the IMF, said in a blog post.
Some countries will recover more quickly than others. China, which was the only major economy to grow in 2020, is forecast to achieve growth of 8.1% this year. The United States should emerge from its deep slump to expand by 5.1%, a pace that’s 2 percentage points faster than the IMF predicted in October.
The 19 countries that use the euro are expected to see growth of 4.2% in 2021. The United Kingdom, which endured a 10% contraction last year as it left the European Union and is now battling a new coronavirus variant, would rebound with relatively modest growth of 4.5%.
“The wide divergence reflects to an important extent differences across countries in behavioral and public health responses to infections, flexibility and adaptability of economic activity to low mobility, preexisting trends, and structural rigidities entering the crisis,” the IMF said.

Uncertainty reigns

The pandemic is causing “exceptional uncertainty,” according to the IMF.
“Although new restrictions following the surge in infections (particularly in Europe) suggest growth could be weaker than projected in early 2021, other factors pull the distribution of risks in the opposite direction,” the IMF said.
If the vaccine distribution and efficacy go smoothly, for example, output could exceed expectations by as much as 1% globally, with companies hiring and expanding capacity in anticipation of rising demand.

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