August 17, 2024
Japan economy rose by 0.8% in Q2 over the quarter and by 3.1% in Q2 over the quarter annualized thanks to a rebound in personal consumption by 1% and capital expenditure by 0.9%. This result looks rather strong after negative reading of -0.6% in Q1 and will help the BoJ to further rase interest rates as it tries to get out of its massive monetary stimulus program.
The rise in private consumption is a good sign as it has been lagging at least for one quarter after capital expenditure which began recovering in third quarter of 2023(see chart). If this dynamic keeps going then the economy has a good chance to sustain steady growth in coming quarters.
The pickup in personal consumption takes place while monetary policy tightens as BoJ rases rates and plans to tame its bonds purchasing program by 3 trillion yen monthly.
In the case BoJ persists with raising rates it will translate into yen appreciation which in its turn will reduce price pressure in the economy.
Summary:
Japan GDP rose sharply in Q2 thanks to personal consumption and capital expenditure. In the case the positive dynamic in personal consumption keeps going the BoJ will get chance to hike rates further which is positive for yen and easing inflation.
⭐️Summary:
Japan GDP rose sharply in Q2 thanks to personal consumption and capital expenditure. In the case the positive dynamic in personal consumption keeps going the BoJ will get chance to hike rates further which is positive for yen and easing inflation.