Wednesday, November 30, 2022

Japan’s economy is recovering slower than expected

Japan’s economy recovered more slowly than expected in the second quarter from the economic slowdown caused by the pandemic.

Data from the Japanese government shows there is growing uncertainty about whether there will be enough growth to support expectations of a recovery in consumption.

Economy growing, but less than expected

Rising consumption supported growth from April to June, with a renewed spike in coronavirus infections, slowing global growth, supply crunch and rising commodity prices pushing up the cost of household living, now clouding the outlook. Huh.

Japan’s economy grew 2.2 percent annually from April to June, but fell short of the average market forecast of 2.5 percent. The increase was followed by a revised 0.1 per cent growth in gross domestic product (GDP) in the January-March period.

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Growth was particularly driven by a 1.1 percent increase in private consumption as many businesses reopened after restrictions on economic activity were lifted.

Data shows more burden on households

However, consumption growth was below the market’s forecast of 1.3 per cent growth. Inflation-adjusted wages and salaries declined by 0.9 per cent quarter-on-quarter in the April-June period, higher than the January-March period (-0.1 per cent).

Capital expenditure grew 1.4 per cent sequentially, beating the average market forecast of 0.9 per cent. Domestic demand contributed 0.5 percentage points to GDP growth.

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