TOKYO: Japan’s economy logged a temporary return to growth at the end of 2021 during a lull in virus cases before the Omicron wave hit, threatening to push the recovery back into reverse.

       Gross domestic product (GDP) expanded at a slightly slower-than-expected annualised pace of 5.4% in the three months through December compared with the previous quarter, the Cabinet Office reported.

       Economists had estimated growth of 6%. A rebound in consumer spending helped lead the recovery.

       Last quarter’s growth was supposed to be the start of a more durable rebound for Japan, which has been the slowest among advanced economies to recover from the pandemic.

       But record cases of the virus at the start of 2022 and renewed restrictions on businesses to fight it have raised the prospect of yet another contraction this quarter.

       The economy has shrunk in half of the last 10 quarters amid on-again-off-again safety advisories that have hit the service sector especially hard.

       “Consumer spending was the biggest driver for the economy last quarter as the state of emergency was lifted,” said Taro Saito, director of economic research at NLI Research Institute.

       “But there’s no doubt that Japan’s growth will hit a sudden brake this quarter and I expect it’s going to be around 0%.”

       Private consumption jumped 11.2% in the last three months of last year.

       This was an indication of how the easing of virus concerns can release demand, with the opposite outcome likely this quarter.

       The fourth-quarter growth wasn’t as strong as expected.

       While business investment and exports also contributed to the expansion as supply chain blockages eased and the worst of the virus’s Delta wave passed, the gains weren’t as robust as expected.

       Government spending also fell, though a stimulus package announced by Prime Minister Fumio Kishida in November is likely to ramp up public outlays this quarter.

       Earlier reports on retail sales and industrial production showed the economy’s momentum weakening after the emergence of Omicron at the end of last year.

       Conditions then deteriorated quickly at the start of the year with daily virus cases jumping from around 500 to a record of more than 100,000 by early February.

       Kishida then reinstated a state of semi-emergency in areas covering most of the economy.

       The quasi-emergency allows local governments to push bars and restaurants to close early and stop serving alcohol. — Bloomberg