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Japan's economy recovers beyond pre-pandemic levels

By Josh White

Date: Monday 15 Aug 2022

Japan's economy recovers beyond pre-pandemic levels

(Sharecast News) - Japan's economy recovered beyond pre-Covid levels in the second quarter, with GDP expanding at 2.2% year-on-year, although that was below consensus expectations for 2.6% growth.
The world's third-largest economy's size stood at JPY 542.1trn (£3.36trn) at the end of the quarter, taking it above where it was at the end of 2019, while the first quarter data was revised to an expansion from a contraction.

"Japanese second quarter GDP recovered from an essentially flat - after revisions - first quarter, as the economy benefited from a post-Omicron rebound," said Craig Botham at Pantheon Macroeconomics.

Consumption rose at a seasonally-adjusted annual rate of 4.6%, up from from 1.2% in the first quarter, which Botham said was the "key driver" of the recovery.

Investment also jumped to 3.4%, from a fall of 4.2%, while government spending was slightly stronger, up 2.2% from 1.7%, and net exports made no contribution to growth in the period.

Craig Botham said the main drag came from inventories, which he said was "inevitable" after their strong contribution to first quarter growth.

"The third quarter will be more challenging, with resurgent Covid cases domestically and fading external demand, but inventories should play a smaller role, if any, and government spending will likely make a larger contribution."

Tokyo's benchmark index was up 1.14% at the end of trading on Monday, with the Nikkei 225 settling at 28,871.78.

Reporting by Josh White at Sharecast.com.

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