Japan Q2 GDP rise on stronger domestic demand

Japan's economy grew in the second quarter at the fastest pace in more than two years on stronger domestic demand.

The Gross Domestic Product (GDP) rose as consumer spending and capital expenditure both rose at the fastest in more than three years.

The GDP expanded an annualised 4.0 per cent in April-June, government data showed, more than the median estimate for 2.5 per cent annualised growth and the biggest increase since January-March 2015.

Compared to the previous quarter, the economy expanded 1.0 per cent, versus the median estimate for 0.6 per cent growth.

Annualised GDP for previous quarter was revised to a 1.5 per cent increase, while quarterly real (inflation adjusted) GDP was revised up to 0.4 per cent growth from a 0.3 per cent increase.

Economic growth is expected to continue in coming quarters, offering the Bank of Japan (BOJ) the hope that a tight labour market is finally starting to boost consumer spending, which in turn makes it easier to generate sustained inflation.

The economy grew for six straight quarters in April-June. The last time the economy had a run of six consecutive quarters of growth was January-March 2005 through April-June 2006.

Private consumption rose 0.9 per cent from the previous quarter, more than the median estimate of 0.5 per cent growth.

Capital expenditure jumped by 2.4 per cent in April-June from the previous quarter, versus the median estimate for a 1.2 per cent increase. 

External demand subtracted 0.3 per centage point from GDP growth in April-June in part due to an increase in imports, reports Reuters.