TOKYO Reuters -- Japan's economy likely grew faster than previously expected in the last quarter and faces ongoing risks from soaring raw material prices and coronavirus-linked production and supply disruptions, according to a Reuters poll of economists on Friday.
Government and central bank policymakers are hoping a jump in consumer activity puts the export-reliant economy firmly on a recovery path after Japan saw COVID -19 case numbers plummet and made progress on vaccinations.
However, analysts warned of risks such as the unexpected economic slowdown in China and semiconductor chip and factory parts shortage due to the pandemic.
There is a risk that supply chain disruption will last longer, putting downward pressure on the global economy, said Harumi Taguchi, principal economist at IHS Markit.
The economy of Japan grew annualized 0.8% in the third quarter, weaker than a 1.2% expansion projected last month, according to the median forecast of 39 analysts polled.
Growth is expected to accelerate to 4.5% this quarter as a high alert against state of emergency lifts consumption and corporate activity, the poll showed.
The projection was roughly in line with the forecast for 4.4% growth last month, the Oct 6 - 14 poll showed.
Parts shortage and factory disruptions in Southeast Asia have forced Japanese automakers to cut output in recent months, clouding the outlook for the export-reliant economy.
Japanese companies also face rising raw material costs, aggravated by a weaker yen that could erode margins.
For a major importer of raw materials, such as Japan, rising input costs will worsen terms of trade, said Mari Iwashita, chief market economist at Daiwa Securities.
It will lead to a reduction in real goods and corporate profits for consumers, Iwashita said.
The poll also showed Japan's new prime minister Fumio Kishida should focus on strengthening coronavirus pandemic, boosting digitalisation of the economy and stimulating domestic demand and consumption.
Yoshihide Suga, who became a leader earlier this month after taking over from Kishida as premier, called a general election on Thursday in which he is hoping to solidify his grip on power.
Asked which areas the government should focus on under the next prime minister, 27 economists selected response to coronavirus pandemic The popular picks were digitalisation in society and among firms and stimulate domestic demand and private consumption, picked by 17 and 14 economists, respectively.
Six economists decided on social security issues such as the pension system and care for elderly and children. Three analysts named foreign and security policy while none chose fiscal reform The poll allowed respondents to choose up to two areas.