Japan economy rebounds after first dip in 2 years

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- AGENCE FRANCE-PRESSE, TOKYO

Aug 11, 2018-Japan bounced back to growth following its first contraction in two years, official figures showed Friday, but fears of US trade wars clouded the outlook for the world’s third-largest economy.

The economy grew 0.5 percent quarter-on-quarter in the April-June period, compared with a 0.2-percent decline in January-March, according to data from the Cabinet Office.

The growth figure—annualised at 1.9 percent—was better than analysts had expected, beating a market consensus of 0.3 percent growth compiled by Bloomberg News.

The data represented a quick turnaround after a series of eight consecutive quarters of growth ended in January-March, interrupting a winning streak not seen since the heady days of Japan’s “miracle” boom of the 1980s.

“The Japanese economy staged an ideal rebound, partly backed by robust corporate activities,” Hideo Kumano, chief economist at Dai-ichi Life Research Institute, told AFP.

But analysts warned US-led trade wars could be a major risk factor for an economy still struggling to win a long battle against deflation.

US President Donald Trump has unsettled rivals and allies alike with harsh trade rhetoric and a raft of tariffs that have affected sectors ranging from agriculture to automobiles.

Trump’s threat to impose stiff tariffs on vehicles imported into the world’s number-two car market remains a concern for Japanese automakers.

Kentaro Arita, senior economist at Mizuho Research Institute, estimated the US tariffs could cost Japan’s auto industry as much as $10 billion.

According to Friday’s data, private consumption—which accounts for some 60 percent of Japan’s GDP—rose 0.7 percent, recovering from a 0.2-percent decline in the first quarter.

Business investment jumped 1.3 percent following a 0.5-percent gain in the previous quarter, thanks partly to booming construction ahead of the Tokyo 2020 Olympics.

Published: 11-08-2018 08:38

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