Japan Improves Q2 GDP Helped by Solid Capital Expenditure

According to the Tokyo Reuters, Japan’s economy were seen growing faster than the initially estimated in the April-June quarter, helped by solid capital expenditure, although a resurgence in COVID-19 is undermining service-sector consumption and clouding the outlook.
The Revised gross domestic product (GDP) data by the Cabinet Office released on Wednesday showed the economy grew an annualized 1.9% in April-June, which is higher than the forecasted data of the economists for a 1.6% gain and the initial estimate of a 1.3% expansion.
The news was followed Prime Minister Yoshihide Suga's announcement last Friday that he was stepping down, paving the way for the Sept. 29 ruling party leadership race, in which contenders will outline their plans to revive the world's third-largest economy.
According to the data given, Japan's economic recovery remains weak due to the slow COVID-19 vaccinations and as pandemic restrictions affects the slow production of the private-sector activity.
Takeshi Minami, chief economist at Norinchukin Research Institute said that "Japan's recovery is lagging behind other advanced economies. As such, the economy's fully-fledged recovery needs to wait at least until early next year."
In addition to this, the global chip shortages may also drag on Japanese car production and shipments while signs of China's economic slowdown emerge as sources of concern.

Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute said that "The 1.9% April-June growth was not enough to push back the nearly 4% dip in January-March - less than a half of it.” “On average, 'stalling' could be the main description of Japan's economy during the first half of 2021,” he added.


According to the data from the Reuters in Tokyo, the second-quarter GDP growth figures translated into a quarter-on-quarter expansion of 0.5% in price-adjusted terms, better than an initial reading of a 0.3% growth and the median estimate for a 0.4% gain.
While the capital expenditure component of GDP grew 2.3% in the second quarter from January-March, bigger than the median forecast for 2.0% growth and the preliminary 1.7% gain.
Private consumption were growing at 0.9% in April-June from the previous three months, up slightly from a preliminary forecast of a 0.8% gain.