The global economic recovery has suffered a glancing blow. The recent performances of big commercial powers and small-but-indicative nations point to a far-from-perfect rebound. A trio of Asian countries reporting growth recently show why the bullish scenarios tossed around at the end of 2020 resonate, but what some of the cheery sentiment is skipping over.
Too much focus on the broad-brush global picture glosses over telling nuances at the regional level; without that insight, projections can go awry. Japan, Singapore and Thailand recorded a promising end to a terrible year. Critically, the forces that drove the world into a massive recession — COVID-19 and the efforts to contain it — still haunt Asia. That matters because the region is perceived to have tackled the pandemic relatively well, and because of Asia's strength in exports and dependence on travel. The next couple of months are going to be tough. The rosy prognosis for things to really get better has been shunted to the middle of the year.
Japan rounded out 2020 with a 12.7% surge in gross domestic product in the fourth quarter. While that was better than forecast, the world’s third-largest economy still shrank a hefty 4.8% for the year and growth is likely to disappear between January and March. The depth of that fresh hole depends on the duration of the state of emergency, which has kept people out of offices and curbed consumer spending. With a spike in infections starting to abate, belief remains in Japan’s recovery. It will just be later, that’s all. Strong Japanese exports and hale capital spending plans from companies, buoyed by a solid recovery in China, will prevent the bottom from falling out. Economists say Japan demonstrated resilience. It will be needed.