The escalating global trade tensions could not dissuade the Japanese economy to return to the growth path for the second quarter of the current year as the measures taken by the government and the Bank of Japan appeared to bear fruits.
A high level of private consumption helped the Japanese economy to grow to an annualised rate of 1.9 per cent which was faster that the market had been expecting.
In the first quarter of the current year, the economy of Japan shrunk for the first time in two years and the growth in the second quarter was more than welcome by all.
Even while there are rising issues of global trade tensions mostly initiated by the US, Japanese officials were in Washington to discuss trade issue with US officials when the news of the growth was released for the Japanese economy. Japan’s Minister for Economic Revitalisation Toshimitsu Motegi was in the US for a meeting with US Trade Representative Robert Lighthizer.
Analysts and market experts have been expecting that the annualised rate of growth in the April-to-June period for the Japanese economy would be of 1.4 per cent. In the first quarter of the current year, Japanese economy had contracted by an adjusted 0.9 per cent.
Growth in the second quarter was weighed down by external demand – exports minus imports, despite the fact that the economy between April and June was driven on by high consumer spending.
“While real GDP growth in Q2 was both strong and higher than the consensus forecast, we believe it is reasonable to conclude that growth momentum for the Japanese economy as a whole is gradually starting to slow,” Nomura said in a research note.
While saying that the discussion with his US counterpart was a “frank exchange of views”, Motegi also stressed that the country believes that the best way to address trade issues was to hold multilateral talks.
Japan is a key stakeholder of the Trans-Pacific Partnership trade deal and the US pulled out of the deal last year after Donald Trump became the president of the country. this was a part of Trump’s protectionist agenda after taking office in 2016.
In recent months, high import tariffs have bene imposed by the US under Trump on a number to its trading partners and Trump has issued repeated threats of imposing high import tariffs on all of the goods that are imported in to the US from China.
This tariff regimen in the US has forced Japan to shift its focus on other markets for trade and commerce. For example, one of the largest free trade agreements in the world was signed last month between Japan and the European Union. the trade is so huge that almost one third of all global trade would and gross domestic product be covered by the agreement.
(Adapted from BBC.com)