Japan's Q2 GDP Grows Much Faster Than Expected, Exports Rise Sharply

tendata blogTrade Trends News

ten data blog15-08-2023

· April-June GDP grew at an annualized rate of +6.0%, +1.5% YoY

· Exports drove Q2 GDP growth, but weak domestic demand undermined optimism as private consumption spending unexpectedly fell

· Solid GDP is good news for policymakers

japan export,japan export grows,japan export q2

Japan's economy expanded for a third consecutive quarter from April to June, despite the prospect of a global recession clouding the outlook, as strong auto exports and tourist arrivals offset the drag of a slower consumer recovery after the epidemic.

Economists polled by Reuters had previously expected the world's third-largest economy to grow 3.1 percent in the April-June quarter. The impressive gross domestic product (GDP) translated into a more modest quarterly growth of 1.5%, above the 0.8% growth forecast.

Prior to that, the economy grew at a revised 3.7% in the first quarter, the fastest rate since the last quarter of 2020.

The solid GDP data came as a relief to policymakers seeking to balance economic growth with sustainable inflation and stable wage growth.

Marcel Thieliant, head of Asia-Pacific at Capital Economics, said the export-driven growth momentum was unlikely to last.

Thieliant said, "While capital goods exports rebounded in June as the biggest drop in overseas investment has passed, we do not expect a strong recovery."

Looking at the major subsectors, private consumption, which accounts for more than half of the economy, fell 0.5 percent from a year earlier between April and June as higher prices hurt sales of food and household appliances.

Exports rebounded 3.2% from the previous quarter (largely driven by a surge in automobile shipments), while imports plunged 4.3% over the same period.

With imports falling for the third consecutive quarter, external demand (i.e. net exports) contributed a 1.8ppt increase to Q2 growth, while domestic demand declined by 0.3ppt, and weak capital spending indicated weak domestic demand.

The Bank of Japan took steps last month to allow long-term interest rates to rise further, a move that analysts see as the beginning of a gradual abandonment of massive monetary stimulus.

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Other Trade Data References to Japan:

1. Japan's New Chip Equipment Export Rules Take Effect

2. EU Lifts Import Restrictions on Japanese Food after Fukushima Disaster

3. How to Import Snacks from Japan?

4. How to Find Ideal Auto Imports from Japan?

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