Japan’s economy has started recovering from the Covid-19 pandemic though the increase was much smaller than forecast. Government data showed that Japan’s economy expanded by an annualised 0.6% in the final quarter of 2022, rebounding from a revised 1.0% contraction in July-September. The increase in GDP was much smaller than a median market forecast for a 2.0% rise. Private consumption rose 0.5% in the fourth quarter, matching a median market forecast. External demand added 0.3% to growth. Japan has seen an increase in the number of overseas visitors. Policymakers hope a rebound in domestic consumption, driven by savings accumulated during the pandemic, will last long enough for wages to pick up and cushion the blow on households from rising food and fuel costs.