Sat, Aug 11, 2018 - Page 10 News List

Japan’s economy rebounds after dip

AUTOMAKERS WARY:Japan Research Institute economist Yusuke Shimoda said talk of US tariffs on vehicles remains a concern, as they ‘have vast supporting industries’

AFP, TOKYO

Japan bounced back to growth following its first contraction in two years, official figures showed yesterday.

The economy grew 0.5 percent quarter-on-quarter in the April-to-June period, compared with a 0.2 percent decline in the first quarter, according to data from the Japanese Cabinet Office.

The growth figure — annualized at 1.9 percent — was better than analysts had expected, beating a market consensus of 0.3 percent growth compiled by Bloomberg News.

The data represented a quick turnaround after a series of eight consecutive quarters of growth ended in the January-to-March quarter, interrupting a winning streak not seen since the heady days of Japan’s “miracle” boom of the 1980s.

However, analysts said that US-led trade wars could be a major risk factor for an economy still struggling to win a long battle against deflation.

US President Donald Trump’s tariffs have affected sectors ranging from agriculture to automobiles.

Trump’s talk of tariffs on vehicles imported into the world’s No. 2 car market remains a concern for Japanese automakers.

“Concerns over the potential auto tariffs can’t be ignored,” Japan Research Institute economist Yusuke Shimoda said.

“Since the automakers have vast supporting industries, the impact of the tariffs would spread widely,” he said.

Mizuho Research Institute senior economist Kentaro Arita said that the US tariffs could cost Japan’s auto industry as much as US$10 billion.

Auto tariffs could deal a blow to the vaunted “Abenomics” policies of Japanese Prime Minister Shinzo Abe, who is aiming to secure his post by winning his party’s presidential election next month.

Abe launched the pro-spending “Abenomics” policy blitz when taking office in late 2012, combining ultra-loose monetary policy and fiscal stimulus in a bid to pep up the former Asian economic powerhouse.

However, consumer spending has remained stubbornly lackluster, with companies still stingy on wage hikes, despite healthy profits.

In late July, the Bank of Japan revised down its inflation forecasts, making minor tweaks to a monetary policy that has so far failed to lift prices.

According to yesterday’s data, private consumption — which accounts for about 60 percent of Japan’s GDP — rose 0.7 percent, recovering from a 0.2 percent decline in the first quarter.

Business investment jumped 1.3 percent following a 0.5 percent gain in the previous quarter, thanks partly to booming construction ahead of the Tokyo Olympics in 2020.

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