TOKYO (AP) — Japan’s economy expanded at an annual rate of 3.1% for the April-June period, marking a recovery from the previous quarter’s contraction, according to data released on Thursday.
In the fiscal first quarter, the world’s fourth-largest economy grew by 0.8%, as reported by the Cabinet Office. This annual growth rate reflects how much the economy would have grown or shrunk if the quarterly growth rate continued for an entire year.
Domestic demand saw a substantial increase of 3.5% from the previous quarter, buoyed by strong consumer spending, private sector investment, and government expenditure. Additionally, exports surged by 5.9%.
This growth comes after a 0.6% decline in GDP for January-March, following a modest 0.1% increase in the previous quarter. Japan’s economic performance has fluctuated between contraction and slow expansion over the past year.
Robert Carnell, ING Economics’ regional head of research for Asia-Pacific, noted that while the GDP data indicate a stronger cycle of income and spending, there is heightened uncertainty about future macroeconomic policies. This uncertainty follows Prime Minister Fumio Kishida’s announcement that he will not seek reelection as the leader of the ruling Liberal Democratic Party. The new party leader, chosen in September, will become the prime minister, adding unpredictability to Japan’s policy direction.
Japan is not experiencing the high inflation seen in other developed nations, with recent price rises standing around 3%. The country had previously struggled with deflation, which had weakened its economy.
The Bank of Japan, which had long maintained zero or negative interest rates, has recently begun raising rates. Analysts suggest that this policy shift might be influencing global stock market fluctuations. According to a report by BMI, a Fitch Solutions unit, the Bank of Japan is expected to adopt a cautious stance on further interest rate hikes due to recent market volatility following their last meeting.
