Abstract
Significance This followed a modest rebound in the final three months of 2021 that proved short-lived after the government reimposed COVID-19 restrictions. The rising cost of imports also slowed growth, with energy prices surging and the yen falling to its lowest level against the US dollar in 20 years. Impacts There are indications that strong consumption could follow the relaxation of restrictions. COVID-19 remains at large, but Tokyo will learn from normalisation policies that have been adopted in other leading economies. Expectations for a further recovery for households and businesses suggest that firms anticipate that an economic recovery is on its way. Suppressed business investment will only take off when rising demand strains capacity, at best a prospect for later this year.
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