Shrugging off a string of natural disasters and defying apocalyptic predictions about collateral damage from the US trade war with China, Japan’s economy grew at its fastest quarterly level since 2016, according to Tokyo.
Revised Cabinet Office data that appeared on Monday showed that growth rose 3.0% in the April-June period, beating the 2.6% figure predicted by economists, according to Reuters, the swiftest rise since the first quarter in 2016.
The revision was a major increase over the initial reading for the quarter, which had been 1.9%.
The key reason for the positive figures was a hefty 3.1% rise in capital spending in the quarter. Outlays in transport and postal services, plus the electrical and chemical industries, were the main sectors driving the expenditure, Reuters said.
Japanese businesses are currently bullish on strong profits, with construction demand ahead of the Tokyo Olympics and Japan’s inbound tourism sector, which has been breaking records in the run-up to 2020.
However, there are still clouds hanging over Asia’s number two economy.
Wage growth at Japan’s major businesses remains stagnant, which continues to have a negative impact on local spending – though there was a 0.7% rise in domestic consumption in the second quarter.
Manufacturing output and exports are also expecting to see a slowdown in the third quarter due to a series of natural disasters that have hammered Japan in recent months – a killer heatwave, typhoons, an earthquake and landslides. These have hit supply chains, damaging local infrastructure and delaying shipments.
Looking further ahead, a sales tax scheduled for implementation next year is expected to have a negative impact, Bloomberg reported.