Japan Economy Returns to Solid Growth in Q2

The Japanese economy advanced 0.5 percent on quarter in the three months to June 2018, after a 0.2 percent contraction in the previous period and beating market consensus of a 0.3 percent growth, preliminary estimates showed. It was the highest growth rate since the third quarter of 2017, boosted by a strong rebound in household consumption and a faster rise in business spending.
Cabinet Office | Rida | rida@tradingeconomics.com 8/10/2018 8:24:47 AM
In the three months to June, positive contribution to GDP growth came from private demand (0.5 percentage points), of which private consumption (0.4 percentage points) and capital expenditure (0.2 percent). At the same time, public demand and changes in inventories were neutral, while net exports had a negative contribution of 0.1 percentage points.

Private demand increased by 0.7 percent in the second quarter, reversing from a 0.4 percent fall in the first quarter, driven by a rebound in private consumption (0.7 percent vs -0.2 percent in Q1) which was way above expectations of a 0.2 percent rise. Also, capital expenditure expanded by 1.3 percent, much faster than a 0.5 percent growth in Q1 and far above forecasts of a 0.6 percent gain. It was the steepest increase in business spending since the first quarter 2015.

Meantime, public demand went up 0.2 percent, compared to a 0.1 percent contraction in the first quarter. The rebound was supported by a pick-up in government consumption (0.2 percent vs flat reading in Q1), while public investment declined 0.1 percent (vs -0.4 percent in Q1).

Exports of goods and services grew by 0.2 percent (vs 0.6 percent in Q1), the slowest increase since the second quarter of 2017. Meantime, imports climbed 1 percent (vs 0.2 percent in Q1).

Japan's economy expanded at an annualised rate of 1.9 percent in the second quarter of 2018, bouncing back from an upwardly revised 0.9 percent contraction in the previous period and beating market expectations of 1.4 percent growth. The expansion was mainly driven by strong household and business spending.

Japan Economy Returns to Solid Growth in Q2