Good news for Shinzo Abe as consumer spending and capital investment ahead of the Tokyo Olympics fires growth of 1% in the latest quarter
The Japanese economy has recorded its longest economic expansion in more than a decade after official data showed that it grew at 1% in the last quarter.
Recording its sixth straight quarter of growth, the economy blew past market expectations with a 0.6% rise in the April-June period, according to figures from the cabinet office on Monday.
The better-than-expected figure – which equates to a storming annualised figure of 4% – came on the back of robust domestic demand and capital spending, which offset a decline in exports.
Private consumption grew at 0.9%, representing a boost for government policies aimed at encouraging more spending. Consumption accounts for more than a half of Japan’s GDP but has been sluggish for years.
The world’s number three economy has been picking up steam, with investments linked to the Tokyo 2020 Olympics also giving growth a boost. The labour market is tight and business confidence is high.
The Nikkei average of leading stocks has risen more than 30% in the past year, helped by growing optimism but also the weaker yen. However, it was off by 0.8% on Monday amid continued tension between the US and North Korea and a stronger currency offset the benefits of the good GDP figures.
“The engines of consumer spending and capital expenditure both fired well in the second quarter, and that’s why domestic demand was so strong,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
“The pace of growth may moderate slightly, but we are still in recovery mode. This is a positive development for inflation.”
Toshimitsu Motegi, the economy minister, was more cautious on the outlook, reflecting some investor warnings that the figure was likely to be revised downwards later in the year.
“If you ask me whether private consumption has fully recovered, I would say it still lacks strength in some areas, which will need to be followed with policy,” Motegi said.
“We’ll make sure that the domestic demand-led recovery continues. What is needed is supply-side reform. We’ll focus our efforts on human resource investment, improvement in productivity, and new growth strategies.”
The latest reading nonetheless means Japan’s economy has had its best string of gains since 2006, during the tenure of popular former prime minister Junichiro Koizumi.
Monday’s figures were also good news for prime minister Shinzo Abe, whose brief and underwhelming first term as Japan’s premier came directly after Koizumi.
A string of short-term leaders followed before Abe swept back to power in late 2012 on a pledge to reignite Japan’s once-booming economy with a plan dubbed Abenomics.
The scheme – a mix of huge monetary easing, government spending and reforms to the economy – stoked a stock market rally and fattened corporate profits.
Japan has been struggling to defeat years of deflation and slow growth that followed the collapse of an equity and property market bubble in the early 90s.
Friends, if you like this post kindly comment below and do share your responds Thanks for reading
The Japanese economy has recorded its longest economic expansion in more than a decade after official data showed that it grew at 1% in the last quarter.
Recording its sixth straight quarter of growth, the economy blew past market expectations with a 0.6% rise in the April-June period, according to figures from the cabinet office on Monday.
The better-than-expected figure – which equates to a storming annualised figure of 4% – came on the back of robust domestic demand and capital spending, which offset a decline in exports.
Private consumption grew at 0.9%, representing a boost for government policies aimed at encouraging more spending. Consumption accounts for more than a half of Japan’s GDP but has been sluggish for years.
The world’s number three economy has been picking up steam, with investments linked to the Tokyo 2020 Olympics also giving growth a boost. The labour market is tight and business confidence is high.
The Nikkei average of leading stocks has risen more than 30% in the past year, helped by growing optimism but also the weaker yen. However, it was off by 0.8% on Monday amid continued tension between the US and North Korea and a stronger currency offset the benefits of the good GDP figures.
“The engines of consumer spending and capital expenditure both fired well in the second quarter, and that’s why domestic demand was so strong,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
“The pace of growth may moderate slightly, but we are still in recovery mode. This is a positive development for inflation.”
Toshimitsu Motegi, the economy minister, was more cautious on the outlook, reflecting some investor warnings that the figure was likely to be revised downwards later in the year.
“If you ask me whether private consumption has fully recovered, I would say it still lacks strength in some areas, which will need to be followed with policy,” Motegi said.
“We’ll make sure that the domestic demand-led recovery continues. What is needed is supply-side reform. We’ll focus our efforts on human resource investment, improvement in productivity, and new growth strategies.”
The latest reading nonetheless means Japan’s economy has had its best string of gains since 2006, during the tenure of popular former prime minister Junichiro Koizumi.
Monday’s figures were also good news for prime minister Shinzo Abe, whose brief and underwhelming first term as Japan’s premier came directly after Koizumi.
A string of short-term leaders followed before Abe swept back to power in late 2012 on a pledge to reignite Japan’s once-booming economy with a plan dubbed Abenomics.
The scheme – a mix of huge monetary easing, government spending and reforms to the economy – stoked a stock market rally and fattened corporate profits.
Japan has been struggling to defeat years of deflation and slow growth that followed the collapse of an equity and property market bubble in the early 90s.
Friends, if you like this post kindly comment below and do share your responds Thanks for reading
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