Japan exits recession as GDP grows 5.0% in Q3

Japan's economy exited recession in the third quarter, growing a better-than-expected 5.0 percent, government data showed Monday, following a record contraction.

A rise in domestic demand as well as exports helped drive the quarter-on-quarter growth, after the coronavirus pandemic and a consumption tax hike slammed the economy into reverse earlier in the year.

The positive figures come after three quarters of contraction in the world's third-largest economy, with revised data showing the economy shrank 8.2 percent in Q2, more than the previously estimated 7.9 percent.

That was the worst figure for Japan since comparable data became available in 1980, exceeding even the brutal impact of the 2008 global financial crisis.

The Q3 growth will be welcome news for Japan's government, which has avoided the tough lockdown measures seen in some other countries as it tries to balance preventing the spread of coronavirus with protecting the economy.

The results also beat economist expectations of 4.4 percent growth, and analysts said the recovery was likely to continue into the final quarter of the year.

"Between July and September, economic activity in Japan experienced a return to a somewhat normal status as the government lifted the state of emergency in the country," said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust.

"Looking ahead, we believe that GDP figures in the next quarter should continue to show signs of recovery, albeit at a slower pace," Oshikubo said in a note before the official release of the data.

"Pent-up demand should decelerate, mainly due to second waves of COVID-19 overseas," he added.

Japan's economy exited recession in the third quarter, growing a better-than-expected 5.0 percent, government data showed Monday, following a record contraction.

A rise in domestic demand as well as exports helped drive the quarter-on-quarter growth, after the coronavirus pandemic and a consumption tax hike slammed the economy into reverse earlier in the year.

The positive figures come after three quarters of contraction in the world's third-largest economy, with revised data showing the economy shrank 8.2 percent in Q2, more than the previously estimated 7.9 percent.

That was the worst figure for Japan since comparable data became available in 1980, exceeding even the brutal impact of the 2008 global financial crisis.

The Q3 growth will be welcome news for Japan's government, which has avoided the tough lockdown measures seen in some other countries as it tries to balance preventing the spread of coronavirus with protecting the economy.

The results also beat economist expectations of 4.4 percent growth, and analysts said the recovery was likely to continue into the final quarter of the year.

"Between July and September, economic activity in Japan experienced a return to a somewhat normal status as the government lifted the state of emergency in the country," said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust.

"Looking ahead, we believe that GDP figures in the next quarter should continue to show signs of recovery, albeit at a slower pace," Oshikubo said in a note before the official release of the data.

"Pent-up demand should decelerate, mainly due to second waves of COVID-19 overseas," he added.