Japan’s economy is growing for the third quarter in a row. But a decline in key consumer spending and corporate capital investment is dampening the outlook.
Japan’s economy grew less significantly than expected in the second quarter. As the government announced on Friday based on revised data, gross domestic product (GDP) rose by an annualized 4.8 percent between April and June. The official statisticians initially calculated growth of 6.0 percent. This means that the upswing continued for the third quarter in a row. But an unexpectedly sharp decline in investment and consumer spending is clouding the prospects of the world’s third-largest economy, ahead of Germany.
Strong car exports and a recovery in tourism from the corona pandemic contributed to the growth. However, compared to the previous quarter, Japan’s GDP only rose by 1.2 percent and not by 1.5 percent as initially calculated. Companies’ capital investments fell by 1.0 percent and did not increase by 0.03 percent as initially calculated. In addition, private consumption, which contributes the most to the country’s economic output at around 60 percent, fell by 0.6 percent instead of 0.5 percent compared to the previous quarter.
According to economists, consumers are increasingly feeling the effects of rising prices. Japan’s consumers spent more money on restaurants and travel after the Corona restrictions were lifted. However, ongoing inflation is weighing on consumers when it comes to spending on non-durable goods such as groceries and everyday products.
Source: Stern
