How Japan weathered trade storms to post strongest growth in two years
Forecast-beating growth was underpinned by heavy capital spending, a bright spot in an otherwise struggling economy
Tokyo — Heavy capital spending in the second quarter drove Japan’s economy to its fastest growth since 2016, underscoring the view that capex continues to back the economy even as trade tensions and a string of natural disasters pose risks to the outlook. Revised cabinet office data out on Monday showed the economy grew an annualised 3% in April-June, handily beating economists’ median estimate for 2.6% gain and the initial estimate of a 1.9% expansion. It was the fastest expansion since the first quarter of 2016. The economy’s improved performance should be a relief for policymakers worried over fallout from a trade war between the US and China, which could derail global growth and in turn damage Japan’s export-reliant economy. Capital expenditure has been a bright spot in Japan’s economy, the world’s third largest, although companies remain cautious about sharing more of their profits with workers, keeping a lid on private consumption and inflation. "The environment surrounding ca...
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