The International Monetary Fund and the Central Bank downgrades growth estimates. In a country lacking in natural resources, such as Japan, the soaring price of raw materials is a major problem. But the aftermath of the latest wave of Covid-19, the heaviest in numerical terms experienced by Japan, is also being felt.
Tokyo (AsiaNews) - Japan's economy is also beginning to feel the effects of the hardships caused by the Russian invasion of Ukraine. Recovery after the sharp contraction of 2020 is therefore further delayed due to the uncertainties of the international context, but other factors are also weighing heavily.
The first sign of concern came last week, when the International Monetary Fund published its own report in which expected growth for the current year was downgraded from 3.3% to 2.4%. The document went on to indicate that consumption would drive the recovery but also pointed out that the outlook had worsened with the war: "the escalation of the conflict in Ukraine poses significant downside risks to the Japanese economy," the report said.
Indeed, the European war poses a problem for Japan's economy on multiple fronts. The first factor is certainly that of supply chains, which due to sanctions and geopolitical tensions will be forced into a phase of readjustment. But the most important issue is certainly the import of energy and raw materials, which for a country lacking in natural resources such as Japan represents a major problem.
The conflict in Ukraine has further accelerated the rise in commodity prices, which had already risen considerably after the first signs of recovery post-Covid: Russia and Ukraine are, in fact, two major exporters of raw materials (together they account, for example, for 30% of all global wheat exports) while Moscow is one of the world's leading producers of oil and natural gas. The increase in prices is therefore likely to impact on the consumption of Japanese families and the profits of companies, with negative consequences for the entire economy.
A second signal arrived on Monday from the Japanese central bank, which in its quarterly evaluations revised downwards the growth expectations for 8 of the 9 regions in which the country is divided. Governor Kuroda Haruhiko, speaking to the directors of the local branches of the Bank of Japan, said that "there is a very high degree of uncertainty about how developments in Ukraine may affect the economy and prices in Japan". Ratings say the recovery is also slowing due to the aftermath of the latest wave of Covid-19, the heaviest in terms of numbers experienced by Japan, which hurt both the service sector and industrial supply chains.
Kuroda's assessment remains positive, however. "The recovery in foreign demand, accommodative monetary policy, and the government's economic stimulus are likely to help the Japanese economy recover despite the impact of rising commodity prices." However, uncertainty also remains due to the yen's depreciation against the dollar, which in recent weeks has made it much more expensive to import the many resources the Japanese economy needs. The answers that many expect may soon arrive, given that at the end of the month the Bank of Japan will publish its growth estimates for 2022.