Japan’s economy recorded 0.9% growth in the July-September quarter, marking a second consecutive quarter of expansion following a 0.5% rise in April-June. This gradual yet steady recovery underscores the resilience of the world’s fourth-largest economy as it continues to navigate a challenging global landscape.
Private consumption, which accounts for approximately 50% of Japan’s GDP, grew by 3.6%, driven by consistent consumer spending, improved wages, and tax adjustments. Domestic demand also rose by an annualized 2.5%, reflecting stronger purchasing power. However, severe weather conditions temporarily disrupted manufacturing in certain regions, dampening expenditures.
Exports climbed by 1.5%, bolstered by a weaker yen, which made Japanese products more competitive overseas. The yen, which hovered around 160 earlier this year, has stabilized near 150, providing mild relief in trade pressures. Despite this boost, the overall impact on the economy remains moderate.
Japan faces ongoing challenges, including inflation, which hit 2.5% in September, and political instability, as Prime Minister Shigeru Ishiba contends with mounting pressures. Additionally, market watchers anticipate gradual adjustments to the Bank of Japan’s zero-interest rate policy, a critical tool in addressing inflationary trends.
Economic analysts, including Katsutoshi Inadome of SuMi Trust, remain cautiously optimistic. Seasonal factors, such as winter bonuses, are expected to further bolster domestic consumption, while growth in other regions may provide additional momentum. Although the recovery remains fragile, Japan’s recent economic performance signals a potential end to its prolonged deflationary struggles, offering hope for sustained growth.
