Japan’s economy beat expectations to grow for the second consecutive quarter, says Findlay Nicolson.
The biggest risks to Japan’s economic outlook have been US protectionism and political uncertainty in Europe with the country’s faltering economy being especially vulnerable to disruptions in the global supply chain which would be caused by ongoing trade tensions.
After months of less than encouraging economic data coming out of Japan, most which seemed to point to economic contraction, the news that Japan’s economy had expanded in Q1 was met with surprise from many economists.
Findlay Nicolson analysts have warned that although Japan’s economy expanded by an annualized rate of 2.1% in the first quarter of this year, making it the second straight quarter of growth, it is not yet out of the woods.
Analysts at Findlay Nicolson say a closer look at Japan’s first quarter figures reveals that the unanticipated growth could be largely attributed to a more rapid decline of imports than exports which could indicate weakened domestic demand. Weak domestic demand is a significant concern for Japan’s policymakers who are planning a sales tax hike for October this year.
Adding to policymakers’ concerns is a decline in private consumption and capital expenditure in the first quarter.