Japan’s economy grew last quarter on healthy consumer spending and business investment | News, Sports, Jobs
FILE – Commuters walk in an alleyway at Shinagawa Station in Tokyo during rush hour, Wednesday, Feb. 14, 2024. (AP Photo/Eugene Hoshiko, File)
By YURI KAGEYAMA, AP Business Writer
TOKYO (AP) — Japan’s economy grew 3.1 percent annualized in the April-June period, recovering from the previous quarter’s contraction, government data released Thursday showed.
According to the Cabinet Office, the world’s fourth-largest economy grew by 0.8 percent in the first financial quarter.
Seasonally adjusted gross domestic product (GDP) measures the value of a country’s products and services. The annual rate shows how much the economy would have grown or contracted if the quarterly rate had remained the same for a year.
Domestic demand grew by a strong 3.5 percent compared to the previous quarter. The reason for this was healthy household consumption, private sector investments and government investments. Exports rose by a whopping 5.9 percent.
Japan’s GDP shrank by 0.6% quarter-on-quarter in January-March, after growing by 0.1% in October-December last year. Economic growth fluctuated between such phases of contraction and weak expansion last year.
“Today’s GDP data signal that the virtuous cycle between revenues and expenditures has become more pronounced, but uncertainty about macro policy has increased,” said Robert Carnell, regional head of Asia Pacific research at ING Economics.
Carnell was referring to Prime Minister Fumio Kishida’s announcement on Wednesday that he would not seek re-election as leader of the ruling Liberal Democratic Party. Whoever replaces him as party leader in September’s election will become prime minister because the party controls parliament.
“There is no strong competitor for Kishida’s successor, which makes it difficult to estimate the political direction of the next government,” said Carnell.
The Liberal Democrats ruled Japan for most of the post-war period and are seen as the forerunners of the country’s rise to economic power. But voters are increasingly concerned about Japan’s waning influence.
Japan does not face the inflationary pressures experienced by parts of the United States and other industrialized nations. Price increases in Japan have recently been around 3%, although the country has suffered for years from deflation, a continuous fall in prices that underscores a fragile economy.
The Bank of Japan, which has kept interest rates at zero or below for years, has finally started raising rates. Some analysts say this move is one of several factors behind the recent wild swings in global stock markets. The swings have calmed down somewhat in recent sessions.
“We now expect the Bank of Japan to be more cautious in raising interest rates due to the recent market turbulence following the last meeting, which saw a significant unwinding of the carry trade,” says a report by BMI, a subsidiary of Fitch Solutions.
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Yuri Kageyama is on X: https://x.com/yurikageyama
