Japan economy grows 0.6 per cent in second quarter

AFP, TOKYO:  Japan’s economy grew 0.6 per cent in the second quarter, official data showed Friday, marking the longest period of expansion in more than a decade for the world’s third-largest economy.

The latest figure was revised down from an initial estimate of 1.0 per cent but was still a strong performance from the Asian powerhouse economy, analysts said.

Japan’s economy has been picking up steam, mainly on the back of surging exports including smartphone parts and memory chips, with investments linked to the Tokyo 2020 Olympics also giving growth a boost.

Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, said that strong growth was likely to continue, although concerns over North Korea would linger.

“Looking ahead—of course we have the North Korean issue which is hard to predict—but otherwise no urgent worries or risks so the economy will likely continue picking up,” he told the agency. Marcel Thieliant from Capital Economic said there were “early indications” pointing to a possible slowdown in the third quarter.

“But the bigger picture is that the economy is experiencing one of the longest recoveries in recent history,” said Thieliant.

On a year-on-year basis, the economy grew by 2.5 per cent, driven by robust domestic demand and corporate investment, which offset a quarterly decline in exports.

The annualised growth rate was especially impressive given that Japan’s potential growth is said to be around one per cent or less, Shinke noted.

But corporate investment was much weaker than the preliminary figures, with the latest data showing 0.5 per cent growth, compared with a 2.4 per cent preliminary figure.

Japan’s labour market is tight and business confidence is high but efforts to lift inflation have largely fallen flat despite years of aggressive monetary easing by the Bank of Japan.

The latest reading nonetheless means the economy has had six consecutive quarters of growth—its best string of gains since the tenure of popular former prime minister Junichiro Koizumi.

Friday’s numbers are also upbeat news for current prime minister Shinzo Abe—whose brief and underwhelming first term as Japan’s premier came directly after Koizumi.

A string of short-term leaders followed Abe’s first term before he swept back to power in late 2012 on a pledge to reignite the once-booming economy with a plan dubbed Abenomics.

The scheme—a mix of huge monetary easing, government spending and reforms to the economy—stoked a stock market rally and fattened corporate profits.

But some critics have cast doubt on the plan, as heavily indebted Japan grapples with low birthrates and a shrinking labour force.

Friday’s data showed private consumption, which accounts for more than half of GDP, picked up 0.8 per cent in the second quarter, compared with a 0.9 per cent rise in the preliminary estimate.

However, Takashi Miwa, chief Japan economist at Nomura Securities, cautioned that growth in the second quarter was bolstered by private consumption, which he said was “not sustainable”.

Japan economy grows 0.6 per cent in second quarter

AFP, TOKYO: Japans economy grew 0.6 per cent in the second quarter, official data showed Friday, marking the longest period of expansion in more than a decade for the worlds third-largest economy. The latest figure was revised down from an initial estimate of 1.0 per cent but was still a strong performance from the Asian powerhouse economy, analysts said. Japans economy has been picking up steam, mainly on the back of surging exports including smartphone parts and memory chips, with investments linked to the Tokyo 2020 Olympics also giving growth a boost. Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, said that strong growth was likely to continue, although concerns over North Korea would linger. Looking aheadof course we have the North Korean issue which is hard to predictbut otherwise no urgent worries or risks so the economy will likely continue picking up, he told the agency. Marcel Thieliant from Capital Economic said there were early indications pointing to a possible slowdown in the third quarter. But the bigger picture is that the economy is experiencing one of the longest recoveries in recent history, said Thieliant. On a year-on-year basis, the economy grew by 2.5 per cent, driven by robust domestic demand and corporate investment, which offset a quarterly decline in exports. The annualised growth rate was especially impressive given that Japans potential growth is said to be around one per cent or less, Shinke noted. But corporate investment was much weaker than the preliminary figures, with the latest data showing 0.5 per cent growth, compared with a 2.4 per cent preliminary figure. Japans labour market is tight and business confidence is high but efforts to lift inflation have largely fallen flat despite years of aggressive monetary easing by the Bank of Japan. The latest reading nonetheless means the economy has had six consecutive quarters of growthits best string of gains since the tenure of popular former prime minister Junichiro Koizumi. Fridays numbers are also upbeat news for current prime minister Shinzo Abewhose brief and underwhelming first term as Japans premier came directly after Koizumi. A string of short-term leaders followed Abes first term before he swept back to power in late 2012 on a pledge to reignite the once-booming economy with a plan dubbed Abenomics. The schemea mix of huge monetary easing, government spending and reforms to the economystoked a stock market rally and fattened corporate profits. But some critics have cast doubt on the plan, as heavily indebted Japan grapples with low birthrates and a shrinking labour force. Fridays data showed private consumption, which accounts for more than half of GDP, picked up 0.8 per cent in the second quarter, compared with a 0.9 per cent rise in the preliminary estimate. However, Takashi Miwa, chief Japan economist at Nomura Securities, cautioned that growth in the second quarter was bolstered by private consumption, which he said was not sustainable.