Japan’s GDP growth shows domestic resilience in face of global slowdown

1517

Beijing

Japan’s economy grew much faster than expected in April-June to mark the third straight quarter of expansion, as robust private consumption and business investment offset the hit to exports from cooling global demand. The data offers some relief for the Bank of Japan, which is under pressure to follow other central banks and ramp up stimulus to head off heightening global risks. Gross domestic product (GDP) grew at an annualized 1.8 percent in the second quarter, the Cabinet Office’s preliminary data showed on Friday, far exceeding a median market forecast for a 0.4 percent increase. It followed a revised 2.8 percent gain in January-March. “There are no signs that the uncertainty from the trade war has prompted firms to rein in investment spending,” said Marcel Thieliant, senior Japan economist at Capital Economics. “Today’s data will assuage some of the concerns among Bank of Japan Board members about the impact of the global slowdown on Japan’s economy.” Private consumption, which accounts for about 60 percent of the economy, rose 0.6 percent from the previous quarter to mark the third straight quarter of increase, thanks to brisk demand for cars and air conditioners, a government official told reporters. Capital expenditure increased 1.5 percent, accelerating from a 0.4 percent rise in January-March and beating a median market forecast for a 0.7 percent gain, as companies invested in streamlining operations in the face of labor shortages. Office building construction and public works projects drove the strength in capital expenditure, analysts said, a sign the economy’s resilience was underpinned by those sectors less affected by slowing global trade. Even exports, which were expected to be weak due to the broadening fallout from the US-China trade war, fell just 0.1 percent after a much bigger 2 percent drop in January-March.—Agencies