Japan Q2 GDP blows past expectations

TOKYO: Japan’s economy expanded at the fastest pace in more than two years in the second quarter as consumer and company spending picked up, highlighting a long-awaited bounce in domestic demand.

The world’s third-largest economy expanded by a much stronger-thanexpected annualised rate of 4.0% in April-June, posting its longest uninterrupted run of growth in a decade, government data showed yesterday.

Activity is expected to continue to improve in coming quarters, offering the Bank of Japan (BOJ) hope that a tight labour market is finally starting to boost wages and consumer spending, which in turn should make it easier to generate sustained inflation.

The rosy data was also a vindication for Japanese Prime Minister Shinzo Abe’s government, which has faced criticism that its economic agenda has not done enough to revive the country’s fortunes.

“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.”

Gross domestic product expanded an annualised 4.0% in April-June, government data showed, more than the median estimate for 2.5% annualised growth and the biggest increase since January-March 2015. –Reuters