The Japanese economy boasted its fastest growth rate in two years during the second quarter, according to a report from CNBC. This new push is aided significantly by the increase in capital expenditure, which comes earlier than previous forecasts.
Between April-June, the Japanese economy grew 3.0 percent, surpassing the median predicted growth rate of 2.6 percent. Capital expenditure expanded by 3.1 percent during the same time frame, hitting speeds last seen in 2015 and beating its prediction of just 2.8 percent. Corporate capital expenditure grew at an 11-year high rate during the quarter as well.
According to Reuters, this announcement could ease the fears of diplomats and investors alike who have been worried that the ongoing trade dispute between China and the United States may spill over onto the island nation. Due to Japan’s substantial reliance on imports, economic concerns in the region always have a chance to affect the country’s markets.
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The Japanese economy boasted its fastest growth rate in two years during the second quarter, according to a report from CNBC. This new push is aided significantly by the increase in capital expenditure, which comes earlier than previous forecasts.
Between April-June, the Japanese economy grew 3.0 percent, surpassing the median predicted growth rate of 2.6 percent. Capital expenditure expanded by 3.1 percent during the same time frame, hitting speeds last seen in 2015 and beating its prediction of just 2.8 percent. Corporate capital expenditure grew at an 11-year high rate during the quarter as well.
According to Reuters, this announcement could ease the fears of diplomats and investors alike who have been worried that the ongoing trade dispute between China and the United States may spill over onto the island nation. Due to Japan’s substantial reliance on imports, economic concerns in the region always have a chance to affect the country’s markets.
The announcement of Japan’s economic performance also came with a statement from Prime Minister Shinzo Abe, who said on Monday that he would continue with his plans to increase the country’s sales tax by October of next year.
“We will carry out fiscal consolidation and want to raise the sales tax as planned,” said Abe while speaking to reporters during a campaign conference according to Reuters. The Prime Minister also said that he had “learned a lesson” from the effects of a 2014 sales tax increase, which hindered the country’s rate of private consumption.
Unfortunately, some analysts predict that Japan’s GDP growth rate will slow down in the third quarter as a result of natural disasters.
Last Thursday the country was hit by a 6.7-magnitude quake which left 44 people dead and another 660 injured, as well as temporarily leaving the island of Hokkaido without power. Mudslides and flooding furthered the misery over the weekend, and according to Reuters, around 2,500 people still need to be evacuated.
Although power has been restored, one of the Island’s fossil fuel power plants, which is responsible for “about half the island’s power” is still offline, and local officials have called for a 20 percent reduction of power usage in the short-term.
A Toyota Motor Corp parts plant in Tomakomai, Hokkaido, is set to resume production on Monday, although work at “16 of its 18 domestic car assembly plants” has been halted to allow the automaker to evaluate “its parts inventory.”
Japan was also hit by Typhoon Jebi last week, which according to the Guardian, left several people dead, significantly disrupted transportation services throughout the country, and blew a tanker ship into a busy bridge.
“Japan’s exports and factory output are set to slow in July-September as supplies and shipments are constrained due to natural disasters and inbound tourism slumps,” said chief economist for SMBC Nikko Securities Yoshimasa Maruyama while speaking to Reuters. “As such, Japan’s economy may suffer a temporary contraction in this quarter.”
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