【Epoch Times News August 15, 2024】The data released by the Japanese Cabinet Office on Thursday, August 15, shows that due to a strong rebound in consumption, the Japanese economy has bounced back from contraction in the previous quarter, with a year-on-year growth rate of 3.1% from April to June, exceeding market expectations.
Japan’s GDP for the second quarter increased by 0.8% compared to the previous quarter, surpassing Reuters’ survey estimate of 0.5%. This also reversed the trend of a 0.6% decline in the revised figures for the first quarter.
The year-on-year growth of 3.1% also exceeded market expectations of 2.1%, compared to a revised decline of 2.3% in the first quarter of this year.
Japan’s nominal GDP for the 4th to 6th months reached 607 trillion yen on an annualized basis, surpassing the 600 trillion yen mark for the first time. This data supports the Bank of Japan’s prediction that a strong economic recovery will help sustain inflation reaching the 2% target and prove that further rate hikes are justified.
The Bank of Japan announced an interest rate hike to 0.25% at the end of July and stated its intention to gradually reduce bond purchases in a data-driven manner. These measures indicate the growing confidence of the Bank of Japan in the economic recovery and highlight its concerns about the weakness of the yen. The Bank of Japan has emphasized wage growth and the onset of benign inflation in its decision-making on monetary policy.
Thursday’s data also showed that private consumption, which accounts for more than half of GDP, grew by 1.0%, exceeding the market expectation of 0.5%, marking the first growth in five quarters. Equipment investment also increased by 0.9%, while exports grew by 1.4%.
Following the release of the GDP data, the Nikkei 225 Stock Average rose by 0.16%, and the TOPIX index climbed by 0.44%.
However, Nikkei Asia pointed out that June’s consumption data may reflect the impact of a one-time tax exemption of 40,000 yen per person (approximately $270), but the effects are expected to be short-lived.
Some economists believe that it is still uncertain whether Japan has truly overcome the negative impact of falling prices.
Hideo Kumano, Chief Economist at the Dai-ichi Life Research Institute, pointed out that in Japan’s aging society, the proportion of elderly people continues to increase, and they are more deeply affected by inflation, and may not necessarily benefit from the wage growth of the working-age population.
Kumano stated that the outlook for the Japanese economy partially depends on the economic data of the United States in the coming months.