TOKYO: Japanese retail sales beat expectations in May as households loosened their purse strings, but underlying trends in consumption remain hostage to COVID-19-linked pressures and suggest the economic recovery will take time to gather steam. With Tokyo set to host the Olympic Games next month, analysts expect Japan’s economy will barely grow in the second quarter after prolonged coronavirus emergency curbs hurt the growth outlook, report agencies.
As major global economies such as the United States rebound strongly from the COVID-19 slump, the weak growth rate in Japan is pressuring policymakers to take fresh supportive measures on top of the massive existing stimulus to boost demand.
Despite the better-than-expected rise in retail sales, the jump was not strong enough to mark a definite shift towards a brighter outlook for spending conditions, said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Many elderly were unlikely to go out and spend money in April and May as there was still a state of emergency or quasi-emergency measures (in major areas),” said Minami.
“It’s hard to imagine that the Olympics will set off a spending rush,” he said, adding that risks remained that another resurgence in COVID-19 infections would weigh on consumption ahead.