Japan’s Q2 GDP grows much faster than expected, helped by exports

A cargo ship and containers are seen at an industrial port in Tokyo, Japan, Feb 15, 2022. REUTERS/Kim Kyung-Hoon/File photo

TOKYO  – Japan’s economy expanded for a third straight quarter in April-June, as brisk exports helped offset the drag from a slowing post-COVID recovery in the services sector, although global recession prospects cloud the outlook.

The 6 percent annualized growth in Japan’s gross domestic product (GDP) figure translated into a quarterly gain of 1.5 percent, much bigger than median estimates of 0.8 percent in a Reuters poll.

It followed a revised 3.7-percent expansion in the first quarter.

The solid GDP data provides relief to policymakers who are seeking to balance economic growth with sustainable inflation and steady wage increases.

By key sub-sectors, private consumption, which makes up more than half of the economy, fell 0.5 percent quarter-on-quarter in the April-June period.

Exports expanded 3.2 percent in the second quarter, while capital expenditure was flat.

External demand, or net exports, added 1.8 percentage points to second quarter growth, while domestic demand shaved off 0.3 points.

The Bank of Japan took steps last month to allow long-term interest rates to rise more, a move seen by analysts as the beginning of a gradual shift away from massive monetary stimulus.