By Kantaro Komiya

TOKYO, Reuters – Japan’s economy grew more than expected in the last quarter of 2021. However, rising input prices probably kept wholesale inflation close to a record level in February, a sign that there are rising risks to Japan’s fragile recovery. A Reuters poll revealed this.

According to 17 economists, the revised gross domestic product (GDP), data from the third largest economy in the world, rose at 5.6% per year between October and December last year. This is slightly more than the preliminary estimate of 5.4%.

According to the Ministry of Finance poll this week, 0.7% more capital expenditures were expected, which is higher than the initial 0.4% increase.

Analysts believe that Japan has not recovered fully from the COVID-19 Pandemic. Despite the high growth, analysts do not think it is a sign of a complete recovery.

Shinichiro Kojishi, Principal Economist at Mitsubishi UFJ Research and Consulting (NYSE::) said, “Even after the upward rev, the GDP size will remain below the pre-pandemic level in October-December 2019”.

Many analysts believe that Japan’s economy will slow down or contract this quarter due to the Ukraine crisis and COVID curbs on consumption.

Analysts believe that the most immediate effect of the conflict in Ukraine will be felt in the form of a sharp rise in oil and other commodity prices.

The poll indicated that wholesale prices rose by 8.7% in February compared to a year ago, and was close to a record set in November due in part to increases in energy costs.

A separate poll found that households spent 3.6% more in January than a year prior, which is the highest increase in six-months.

At 8:50 AM on March 9, the government will publish revised fourth quarter GDP data (2350 GMT on March 8) as well as household spending data (8:50 AM on March 11, 2330 GMT on March 10).

The Bank of Japan will publish the wholesale inflation data on March 10, at 8:50 AM (2350 GMT), March 9.