TOKYO — Japan’s economy bounced back into growth in 2021, expanding for the first time in three years as easing concerns about the coronavirus prompted a surge in consumer spending in the year’s fourth quarter.
The result is a rare economic bright spot for Japan, which had been struggling with slow growth even before the virus hit amid slumping demand for exports and trade frictions between the United States and China.
But the good news is likely to be followed, once again, with bad as the Omicron variant of the coronavirus has driven consumers back indoors and has disrupted manufacturing during the winter months.
Japan’s economy, the third largest after the United States and China, expanded in 2021 by 1.7 percent in real terms, government data showed Tuesday. The result followed a contraction of 4.5 percent in 2020 and a 0.2 percent drop the year before.
The growth last year was driven by a jump in domestic consumption as vaccine uptake reached almost 80 percent and the pandemic threat receded. For a brief window, the virus seemed to have been vanquished, with daily case counts hovering in the low hundreds. Relieved, people flooded back into shops and restaurants.
In the October-to-December period, the country’s economy grew by an annualized rate of 5.4 percent, the data showed. The result, a quarterly rise of 1.3 percent, followed a contraction in the previous three-month period, when economic output shrank at a revised annualized rate of 0.7 percent.
The autumn was “a very good time for Japan’s economy thanks to the good vaccine rollout,” said Naohiko Baba, chief Japan economist at Goldman Sachs, adding that “finally, Japan’s economy started to reopen.”
That bright spot, however, looks to have been brief, with short-term forecasts provoking a strong sense of déjà vu.
Analysts agree that the country’s next reporting period is likely to show that the economy — which has bounced between growth and contraction on a quarterly basis for the better part of two years — shrank again, as the arrival of Omicron battered consumption and forced infected workers to stay home, disrupting manufacturing.
Surging commodities prices and a weak yen are also putting the first real upward pressure in decades on the price of consumer goods, creating another potential headwind for consumption.
“Even without the state of emergency, people’s mobility was down a lot because of the big threat of the Omicron variant,” Mr. Baba said. Tokyo and other parts of the country have been under a quasi-state of emergency as Omicron cases rose.
But the situation is likely to improve as spring turns to summer and, businesses hope, the virus’s impact on the economy wanes. Barring the appearance of another disruptive variant, the prospects look good: As in other countries, Omicron has so far proved much less virulent than previous variants, and case numbers — which surged to their highest levels during the pandemic last month — appear to have already peaked.
“In the medium term, there’s a lot of potential for Japan’s economy to accelerate,” said Izumi Devalier, the head of Japan economics at Bank of America.
Still, one long-term concern among economists is that the virus may have caused the economic equivalent of long Covid, indefinitely weakening consumption patterns among consumers who have become used to going out less and staying home more, she said.
Ms. Devalier, however, remains sanguine that consumer sentiment will rebound as the virus recedes. “What we’ve noticed is every time the virus ebbs, every time a virus wave peaks out and you have a reduction in virus risk, consumer spending surges quite strongly,” she said.
Hisako Ueno contributed reporting.
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