Japanese Market Shows Up Strong With Robust Q2 GDP Results

The Japanese market has recorded a surprisingly strong second-quarter gross domestic product (GDP) performance which has put the country at the top of growth charts comprising Group of Seven (G-7) economies.

Recording an annualized growth of 4 percent for the second quarter of 2017, Japan has registered its sixth successive quarter of expansion, reviving hopes of sustained recovery in the country’s economy.

Financial experts state that one of the primary reasons for the growth is the improvement in domestic consumption rates which continues to maintain momentum.

Private consumption and business spending during the last quarter was the highest since the first quarter of 2014 according to the latest data. Japan’s economy suffered an extended slump after a sales tax increase was affected in April 2014. For the second quarter of this year, the adjusted private consumption which accounts for nearly 57 percent of the country’s real GDP, was up by 0.9 percent over the previous quarter.

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Data shows that even though exports have remained the main contributor for growth in recent times, domestic demand has increased its contribution in the last quarter for the first time. Business spending has also jumped by 2.4 percent. With these new results, the Japanese economy has hit 545 trillion yen ($4.97 trillion) for the second quarter. Rob Carnell, chief economist for Asia at ING in Singapore, said that the latest growth trend was not one-off and was likely to be sustained.

In a statement Carnell said

That makes Japan the fastest-growing economy in the G-7 this quarter by our reckoning and may restart the chatter about the BOJ’s eventual QQE exit strategy. This was not one of those fluky one-offs that was caused by a surge in inventories that will be worked down in coming quarters, or one of those random spikes caused by exports and imports growing out of sync

There are other analysts who also agree with Carnell’s views. Kathy Matsui, chief Japan strategist at Goldman Sachs Group Inc. said that the Japanese economy was in a transitional phase and the latest data was strong evidence that the domestic consumption was finally on the upswing. She went on to point out that the growth in domestic consumption would not occur without a strengthening in the wages.

However given that several other countries of the G-7 bloc – Germany, Canada, and Italy –are yet to release their second quarter data, Japan is not expected to retain its top spot.

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