Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

Japan’s economy could emerge from a damaging state of emergency this quarter on a less-shaky footing if growth at the end of last year was as strong as economists estimate.

The latest consensus is for an annualized expansion of 10.1% in the final three months of 2020, more than twice the size forecast in early December, buoyed by exports and a smaller-than-expected hit to consumer spending. Official gross domestic product figures are due Monday.

While the world’s third-largest economy is taking another bruising this quarter under renewed emergency guidelines, a stronger showing at the end of 2020 would suggest that when growth eventually returns, the recovery may be sturdier than first envisaged.

Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

There are already signs of resilience. Government spending, Bank of Japan loan support and a corporate and employee culture that has traditionally put job security ahead of high wages have helped keep unemployment at just 2.9%. Bankruptcies have fallen by at least 20% from a year earlier in recent months.

That suggests Japan is avoiding some of the deeper scarring affecting other countries where failed businesses and lost jobs are leaving economies less prepared to bounce back.

What Bloomberg Economics Says:

“Japan’s GDP growth likely slowed in the fourth quarter after a sharp rebound in the third that was precipitated by the lifting of virus-containment measures. Even so, the expansion probably remained in the double-digits and appears to have been broad-based, with all the major components excluding inventories contributing to growth.”

--Yuki Masujima, senior economist. For full preview, click here

Elsewhere, the World Trade Organization is set to finally get a new chief and central banks in Turkey, Indonesia and across Africa set rates.

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

U.S. and Canada

Investors in the U.S. will be watching for the latest data on retail sales, industrial production and weekly jobless claims. Signs of positive momentum in the economy has spurred traders’ expectations for inflation and fueled debate over how much more aid is needed. Minutes from the last meeting the Federal Reserve’s interest-rate setting committee are also due out on Wednesday.

Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

In Congress, President Joe Biden’s $1.9 trillion Covid-19 relief package proceeds to the next step this week, with the House Budget Committee pulling all the components into a single bill. A vote in the chamber is expected next week.

In Canada, markets will be focused on Wednesday’s inflation data.

  • For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Europe, Middle East, Africa

The impact of sluggish vaccinations on the euro region’s recovery this year will be one element that investor may focus on when scrutinizing the European Central Bank’s account of its last policy meeting, due for release on Thursday. After the decision on Jan. 21, President Christine Lagarde was forced to acknowledge that the economy faces the threat of a double-dip recession.

In the U.K., the main data due are for inflation, likely to show the rate of annual price increases slowing to 0.5% in a prelude to what is likely to be a significant acceleration as the year progresses. Bank of England forecasts point to that indicator rising above 2% next year.

Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

In Africa, four interest-rate decision will keep investors busy. With Uganda’s inflation muted and the economy projected to rebound in 2021, the central bank will probably hold its benchmark for a fourth straight meeting on Monday. Two days later, Namibia’s central bank will probably also stay unchanged.

Also on Wednesday, there’s an outside chance that Zambia’s central bank could hike as it seeks to boost the kwacha and tackle inflation at higher than 20%. Meanwhile Rwanda’s policy makers may see room for further easing on Friday with inflation slowing.

In Turkey, central bank Governor Naci Agbal is seen holding for a second meeting, after cumulative hikes lifted the benchmark rate by 675 basis points to 17% last year.

  • For more, read Bloomberg Economics’ full Week Ahead for EMEA


Spending numbers from China during the Lunar New Year holiday will be closely scrutinized, with most expecting drastic declines from usual levels as travel is discouraged and factory bosses keep employees at work.

Indonesia’s central bank meets Thursday and may cut interest rates to buoy the recovery according to early respondents to Bloomberg’s surveys.

  • For more, read Bloomberg Economics’ full Week Ahead for Asia

Latin America

With Brazil and Argentina out through midweek due to the Carnival holiday, the focus will be on two Andean countries. Colombia on Monday will be the second of Latin America’s big economies to report fourth-quarter output following Mexico’s -8.3% full-year reading. The central bank looks for a 7.2% decline in 2020 -- placing its recession roughly mid-way between the -11.5% plunge forecast in Peru and -4.5% seen in Brazil.

Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

Also closing out 2020 this week is Peru, with reports on output and jobs. The economy is gradually recovering from one of the world’s deepest slumps with some momentum heading into year-end. Look for fourth-quarter GDP data out Thursday to remain negative, though December economic activity may have climbed back to zero.

Japan’s Pre-Emergency Growth Could Point to Resilience: Eco Week

A swathe of the South American country, including the capital city of Lima, entered a partial lockdown in late January amid a resurgence of the virus, likely pushing up unemployment from the 13.8% posted in December.

  • For more, read Bloomberg Economics’ full Week Ahead for Latin America

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