Japan Inc. still seeing uneven recovery from pandemic as services lag

The earnings recovery from the COVID-19 fallout is still uneven, with a wide gap remaining between Japanese manufacturers and nonmanufacturers.

A state of emergency was fully lifted in Japan at the start of the October-December quarter and economists say this should give a much-awaited boost to the nonmanufacturing sector, especially service providers that have lagged in a recovery led largely by exporters such as Toyota Motor Corp.

Still, Japan’s major airlines are expected to stay in the red for a second year in the 12-month period through March 2022. Train operators are also predicting net losses for the fiscal year and travel agency H.I.S. Co. expects a record net loss of 53 billion yen ($467 million) in the year that ended in October, highlighting the severity of the blow from the pandemic.

The expected resumption of a government subsidy program to spur local tourism in Japan is set to serve as a plus for the transport and tourism sectors.

Still, it is expected to take longer for cross-border travel to return to pre-pandemic levels, aviation experts say.

Air travel demand is expected to recover to 40 percent of 2019 levels, or before the pandemic, in 2021 and to 61 percent in 2022, according to the International Air Transport Association.

The latest slew of earnings reports show the recovery has come sooner for manufacturers.

The reopening of overseas economies has benefited Japanese exporters, especially automakers. Cars and auto parts account for about 20 percent of Japan’s exports in value terms.

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