Japan’s Q2 GDP growth was revised down to 2.9% due to reduced corporate and personal spending, with analysts forecasting gradual improvement supported by wages and consumption.
Bollywood Fever: Japan’s economy expanded at an annualized rate of 2.9% in the April-June quarter, according to revised data released on Monday by the Cabinet Office.
This is a slight decrease from the preliminary estimate of 3.1% growth and below economists’ median forecast of 3.2%.
The revised data reflects lower-than-expected corporate and personal spending.
In quarter-on-quarter terms, Japan’s gross domestic product (GDP) grew 0.7% in the second quarter, compared to the 0.8% rise reported last month.
The downward revision was mainly due to weaker-than-anticipated capital expenditure and private consumption, which accounts for over half of the Japanese economy.
Revised Spending Figures
- Capital expenditure, a key indicator of private demand, rose 0.8% in Q2, down from the initial estimate of 0.9%. Economists had predicted a rise of 1.0%.
- Private consumption increased by 0.9%, slightly lower than the preliminary reading of 1.0% growth.
- External demand (exports minus imports) subtracted 0.1 percentage point from growth, while domestic demand contributed 0.8 percentage point.
Future Outlook
Despite the slight downward revision, analysts expect Japan’s economy to continue its gradual recovery, supported by rising wages and steady personal and corporate spending.
However, there are lingering concerns over external risks, including potential slowdowns in the U.S. and Chinese economies.
The Bank of Japan raised its key interest rate in July to 0.25%, with markets closely watching consumption and other economic indicators to gauge the timing of the next policy move.
Most economists do not expect a rate hike at the upcoming policy meetings on September 19-20, but a majority predict some tightening by the end of the year.
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