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.