TOKYO—The economy in Japan, as in many developed countries, is about halfway back from the worst of the pandemic. The question now is whether to jolt it back to full health with a quick dose of government spending or focus more on getting the private sector to invest.
The world’s third-largest economy after the U.S. and China grew at an annualized pace of 21.4% in the July-September quarter. That is the fastest in 40 years of comparable records, yet the Japanese economy is still about 6% smaller than at its peak a year ago.
Economists said getting all the way back might not happen until 2024.
“The pace of growth is expected to slow down sharply in the near term because pent-up demand is likely to decline both at home and abroad, while infections are quickly spreading again in the U.S., Europe and Japan,” said BNP Paribas economist Ryutaro Kono.
The debate in Tokyo anticipates what the U.S. is likely to see next year when Joe Biden becomes president and tackles an economy that is still struggling in many areas.
