Sat, 10 Jun 2023

Officials hopeful as Japan's economy grows at 1.6%

Robert Besser
23 May 2023, 15:30 GMT+10

TOKYO, Japan: Data released this week showed that in the quarter through March, Japan's economy grew at a rate of 1.6 percent annually, amid easing COVID-19-related restrictions that spur consumer demand.

In a statement, the government Cabinet Office said the real gross domestic product of the world's third largest economy grew 0.4 percent in January-March.

This figure was better than the market forecast of 0.2 percent, and the strongest GDP growth pace since April to June 2022 at 1.1 percent.

Private demand, which rose 3.1 percent, contributed the most to this growth, with consumer spending and private investment rebounding, assisted by the recent opening of borders to tourists and other incoming travel.

Additionally, public demand grew 1.8 percent annually.

"Japan's economy appears to be on a gradual recovery track despite sluggish global demand," said Robert Carnell, regional head of research Asia-Pacific at ING, as quoted by the Associated Press.

However, overall growth was stifled by slowing exports, with Japan's January-March exports declining an annualized 15.6 percent, reflecting the struggles facing global economies.

Due to the fact that it has been consistently hit for decades by deflation, unlike most countries, including the US and Europe, Japan has been more cautious about its approach to inflation.

While not directly affecting core inflation, electricity bills were recently increased across the country, which will likely have some trickle-down impact to increase inflation.

The relatively positive analyses for the Japanese economy could increase public support for Prime Minister Fumio Kishida, who could call a snap parliamentary election later this year.

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