By Kantaro Komiya

TOKYO (Reuters – Japan’s economy is expected to rebound in the third quarter of 2021 due to rising consumption during a decrease in COVID-19 patients, a Reuters poll revealed. But, it could slip back into contraction after a surge in Omicron variant infections.

Also, the poll showed that wholesale prices rose in January compared to a year ago. This is a signal that higher energy costs and increased raw material costs will continue to erode corporate profits.

According to Reuters, the global third-largest economic country likely grew at an annualized 5.8% rate in October and December, following a 3.6% contraction during the third quarter.

According to the poll, 2.2% increase in Japan’s private consumption was responsible for this rise.

According to poll results, capital spending likely increased by 0.5% and external demand increased by 0.3%. These figures were not shaved or added on from the prior quarter’s, but still indicate that there was an increase in capital expenditure.

According to economists from SMBC Nikko Securities, “Japan’s economy clearly rose in October and December as foot traffic rebounded thanks to the lifting COVID-19 curbs”

A separate poll will show that wholesale prices increased by 8.2% in January, compared with a year before. While this is slower than in November’s record 9.0%, it still shows reasonable growth.

According to the poll, December saw a 0.3% increase in household spending compared with a year prior. This is the first time in five consecutive months.

Preliminary October-December GDP data will be released by the government at 8:50 AM on February 15 (2355 GMT, February 14). Household spending data will follow at 8:30 AM on February 8 (2330 GMT), Feb 7.

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

Japan has brought back coronavirus controls in many areas. However, local authorities have been considering tighter regulations to slow the rapid spread of Omicron. Japan recorded a record number of daily infections on Thursday.