Japan’s economy expanded at a much faster clip than forecast, propelled by robust exports in a sign that the recovery remains well on track.
Gross domestic product grew at an annualized pace of 6% in the second quarter, marking the strongest growth since the last quarter of 2020, Cabinet Office data showed Tuesday. The figure exceeded economists’ forecast of 2.9% growth. Net exports contributed 1.8 percentage points to the expansion versus consensus estimates of 0.9 point.
Tuesday’s data add to signs that the world’s third largest economy continues to recover from the pandemic, even as economists see headwinds on the horizon in the US, China and Europe. The result was consistent with views at the International Monetary Fund, which recently bumped up its 2023 growth outlook for Japan to 1.4%.
The expansion was primarily driven by recovering external demand. Trade data showed that exports remained resilient over the last quarter, led by auto shipments to the US and Europe.
Rising numbers of inbound travelers, whose contribution is also factored into the net exports component of GDP, provided a big economic boost after authorities lifted border controls at the end of April. The number of foreign visitors has recovered to more than 70% of pre-pandemic levels as of June, according to the Japan National Tourism Organization. Data for July are due Wednesday.
Tourism spending is expected to provide a bigger boost from August after China lifted a ban on group travel last week. Chinese tourists accounted for more than a third of the more than 1 trillion yen in such outlays in 2019.
The better than expected results came with some caveats, as private spending was weaker than forecast.
