Japan's economy appears to be on the mend, according to government sources. Exports jumped by more than a third from a year ago. The recovery from the COVID-19 pandemic is giving a tailwind to export industries. Exports to the US, Europe, and other Asian countries increased throughout June and July.
Imports grew as well, although less than exports, causing a trade surplus with the US in June and July but a deficit with China. The world's third-largest economy saw a notable import increase from Brazil, Kuwait, and Belgium. By category, exports rose in food, iron and steel products, and electronic parts while imports grew in food, auto parts, and oil.
Rebound Due to Overseas Demand
A lot of the progress is due to the overseas economic rebound, which has led to increasing demand by foreign companies. In the US and Europe, governments started to lift lockdown measures, and domestic companies boosted sales. As customer demands bounce back, businesses are increasingly dependent on imports, including from Japan.
Moreover, both the EU and the US have eased import restrictions on some Japanese food products, introduced after the 2011 meltdowns at the nuclear plant in Fukushima. Exporters of bamboo shoots made in Fukushima Prefecture, home to the stricken plant and cultivated mushrooms, will no longer be required to submit certificates of radiation checks starting from October 10th. That move from the EU should give Japan's food exports a further boost.
COVID Remains a Threat
Meanwhile, Japan is seeing a surge in COVID-19 infections, causing some hospitals to turn away patients. The government still extended the state of emergency in 19 prefectures, including Tokyo. It is now leaning towards at least partially lifting the COVID-19 measures as the situation improves. Prime Minister Yoshihide Suga also announced that the government would reorganize hospital systems to increase wards for COVID-19 patients.
While Japan is trying to curb infections, it does whatever it can to keep the economy going. Japan's economy grew at a 1.3% annual rate in the second quarter, prompting an imports uptick—particularly auto parts and oil. While manufacturing companies are mostly keeping up, the emergency revolves around restaurants and bars, which must close early and not serve alcohol. Also, department stores and shopping malls must limit crowd sizes.
Whether imports and exports will continue to grow is closely tied to the further spread of the virus. Worries are growing about the delta variant which is more contagious, and previously, the Tokyo Olympics were already held without allowing any fans.
On the vaccine front, the rollout started slowly, although about 40% of the population is now fully vaccinated. Still, some government advisers have suggested that stricter measures may be crucial.
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