(Real GDP will exceed its most recent peak in FY 2023)
Growth in the July–September quarter of 2020 was significantly positive following the lifting of the state of emergency, but the pace is likely to slow significantly in the October–December quarter of 2020.
Real GDP growth rates in the United States and the euro area in the July–September quarter of 2020 were 33.1% and 60.5% on an annualized basis from the previous quarter, respectively. Recently, however, the number of people infected with the novel coronavirus has increased, and the trend toward lockdown has spread again in Europe. In response, real GDP growth in the euro area is expected to turn negative again in the October–December quarter of 2020. Exports of goods and services in the GDP statistics rose 7.0% in the July–September quarter, but in the October–December quarter of 2020, growth will decline, particularly to the U.S. and the euro area. On the other hand, imports, which fell by 9.8% in the July–September quarter from the previous quarter, are likely to increase in the October–December quarter after that. Contributions of external demand to the real GDP growth in the October–December quarter of 2020 is expected to be slightly negative.
Private consumption, which was the main cause of the substantial positive growth in the July–September quarter, is expected to slow down in the October–December quarter as the growth in service consumption—supported by measures to stimulate demand, such as the Go To campaign—is increasing, while the growth in consumption of goods is slowing due to the end of pent-up demand.
Although capital investment, which has been declining since the economic downturn, will increase in the October–December quarter of 2020 for the first time in 3 quarters, it is highly likely that the pace of recovery will remain moderate for the time being due to deterioration in corporate earnings and high uncertainty over the future.
Real GDP in the July–September quarter of 2020 grew at an annualized rate of 21.4%. It will decrease to 4.0% in the October–December quarter of 2020, and it will slow down in 2021. However, since the economy is in the process of normalization, it is expected that the growth rate will clearly exceed the potential growth rate for the time being. However, if a new spread of the novel coronavirus occurs and the declaration of a state of emergency is reissued, economic growth would be negative again and a slowdown in the economy would be inevitable.