Japan's Economy Surges with 3.1% Second-Quarter Growth
Japan's economy grew at an annualized rate of 3.1% from April to June, surpassing market expectations and marking a significant rebound from the previous quarter's slump. The growth was primarily driven by a strong recovery in private consumption, which increased by 1.0% and accounts for over half of Japan's economic output. Capital spending also rose by 0.9%, contributing to the overall economic expansion. However, external demand slightly dampened the growth.
The Bank of Japan (BOJ) views this economic upturn as a positive sign toward achieving its 2% inflation target, potentially justifying further interest rate hikes. The BOJ had previously raised its benchmark interest rate and plans to reduce its bond-buying program. Despite these economic gains, rising living costs have contributed to public dissatisfaction, leading to Prime Minister Fumio Kishida's resignation. The ruling Liberal Democratic Party is now preparing to select a new prime minister, with potential candidates including digital minister Taro Kono and economic security minister Sanae Takaichi.
