Japanese economic growth delivers a positive surprise

Japan’s economy grew by +1.0 percent month-on-month in the second quarter of 2017, which equates to an annualised rate of +4.0 percent. This growth rate marks the strongest growth momentum in over two years and was attributable to domestic factors in the second quarter. Capital expenditure jumped by +2.8 percent over Q1, three times more than in the previous quarter. Private consumption was robust in the second quarter, rising by +0.9 percent and was therefore representing an important driver of GDP growth.

Deflation persists stubbornly despite the high level of growth, so that high real growth in Japan is still accompanied by lower nominal growth rates. The GDP deflator, in other words the price index for all goods and services produced in Japan, was still negative recently.

This is a very positive trend overall in Japan and highlights the still very robust fundamental global economic environment. Although political activities can in the short term give rise to mounting uncertainty, the good underlying sentiment should continue to prevail provided words are not translated into action.



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