FEATURE: Japan's GDP rebounds, up annualised 1.9%

TOKYO (The Japan News/ANN) - Japan’s real gross domestic product in April-June rose 0.5 per cent from the preceding January-March quarter, marking the first rise since the October-December quarter, the Cabinet Office announced in its interim report Friday.

 The GDP on an annualized basis, on the assumption that the growth continues for 12 months, grew 1.9 percent.
The nation’s real GDP, excluding effects from price fluctuations, had grown for eight consecutive quarters from January-March 2016 until falling into negative territory in January-March 2018. Friday’s report showed that the economy is displaying signs of modest recovery after temporarily stagnating.
 A major factor behind the return to positive growth in the April-June quarter is the recovery of consumer spending, which accounts for about 60 percent of GDP.
 On a quarterly basis, private consumption rose 0.7 percent from the preceding quarter, the first increase since the October-December quarter, after a negative 0.2 percent reading in the January-March quarter.
 Vegetable prices, which rose in the preceding quarter due to bad weather, have stabilized, resulting in restoring households’ consumer appetite. Another factor behind the increase is believed to be the brisk sales of automobiles and home electrical appliances following a steady trend of wage hikes.
 Capital investment rose 1.3 percent from the preceding quarter, a much larger increase than the preceding quarter’s growth of 0.5 percent. Buoyed by brisk business performance, investment in production machinery was in good condition. Investment in labor-saving measures to cope with worker shortages apparently have increased as well.
 Exports continued to grow, though the gain was slight at 0.2 percent. Public works investment fell 0.1 percent and investment in housing dropped 2.7 percent.
 Nominal GDP, which closely reflects the household sentiment, rose 0.4 percent, marking its first rise since the October-December quarter. On an annualized basis, the figure increased by 1.7 percent.
 “Consumer spending has recovered, but households haven’t loosened up their wallets due to a limited increase in wages,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities Inc. “There are many factors causing anxiety, including a risk of trade friction intensifying around the world.”

No rosy picture
By Yukinobu Sakamoto / Yomiuri Shimbun Staff Writer

 Japan’s gross domestic product has secured positive growth for the first time since the October-December quarter, according to the interim report for the April-June quarter. The Japanese economy’s prospects, however, remain unpredictable.
 U.S. President Donald Trump has increasingly escalated his protectionist policies, further aggravating the U.S.-China trade friction. If the United States imposes additional tariffs on imported cars as it is currently considering, negative effects on the Japanese economy would be inevitable.
 Domestic concerns also exist. The heavy rain in the western part of the country and other factors may put downward pressure on domestic demand.
 Consumer spending has recovered partly because of the abatement of a special factor brought about by the unstable winter weather that caused vegetable prices to soar in the January-March quarter. It is hard to say that consumer expectations have turned upward.
 The government is urged to address the growth strategy and regulatory reform swiftly in order to ensure steps for escaping deflation.

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