|
The
world’s fourth-largest economy grew 0.2% in the fiscal second
quarter, marking the second straight quarter of expansion,
following 0.5% growth in April-June.
Seasonally adjusted gross domestic product, or GDP, measures the
value of a nation’s products and services. The annual rate shows
how much the economy would have grown or contracted, if the
quarterly rate continued for a year.
Domestic demand grew at an annualized rate of 2.5%. Private
consumption, which makes up more than half of Japan’s GDP, grew
3.6% on the back of healthy household consumption, according to
preliminary Cabinet Office data.
Recent data show wages and employment are improving. Spending
was lower than the previous quarter, partly because of severe
weather that crimped spending and shut down some factories.
Recent income tax reductions helped boost spending.
Exports grew 1.5%. The weakening yen is a plus for exports,
tending to make Japanese products cheaper overseas. But the
impact was relatively limited in the latest quarter. The
Japanese yen was trading at 160-yen levels earlier this year.
It’s now trading at 150-yen levels.
Prior to the last two quarters, the economy contracted 0.6% in
the January-March quarter after recording a 0.1% growth in
October-December in 2023, highlighting how Japan’s economy
recently slipped into periods of contraction in between weak
expansion.
“We believe the Japanese economy will continue to grow
gradually, supported by growth in overseas economies,” said
Katsutoshi Inadome, senior strategist at SuMi Trust.
He noted winter bonuses many Japanese get in coming months
should also help strengthen domestic demand.
As for headwinds, Japan is facing political uncertainty with
Prime Minister Shigeru Ishiba having to survive a runoff this
week to remain in office but now facing an emboldened
opposition.
Unlike the U.S. and other developed nations grappling with
inflationary pressures, Japan struggled with years of deflation,
or a continuous cascading down of prices that underlines a
fragile economy. Inflation stood at 2.5% in September.
Market watchers are also focused on when the central bank might
move next on interest rates. The Bank of Japan kept interest
rates at zero or below zero for years to wrest the economy out
of deflation but is gradually raising them.
All contents © copyright 2024 Associated Press. All rights reserved
|
|
