Japanese annualized GDP rose Private consumption contributed 0.4 percentage points (ppt) to Q2 real GDP growth. Private residential investment contributed 0.4 ppt to Q2 real GDP growth. Private residential investment in Q2 grew at the fastest pace since Q3 2011, driven by increased housing starts in the quarter. Public investment contributed 0.4 ppt and government consumption contributed 0.2 ppt. Business investment detracted 0.2 ppt during Q2 while change in inventories detracted approximately 0.1 ppt. Net trade was the largest drag on GDP, detracting 1.0 ppt from Q2 real GDP growth, as exports declined an annualized 5.9% in Q2 compared to Q1.
Japan’s Q2 GDP was worse than expected, driven largely by a shrinking trade surplus in Q2. The strengthening of the yen year-to-date has negatively impacted Japan’s exports. The leap year boosted household consumption in Q1 and while household consumption also grew in Q2, household consumption was flat in the first half of 2016 compared to the same period in 2015. Similar to the U.S., Japan’s economy is consumer-oriented. Slow household consumption growth has hindered a reacceleration in GDP growth in Japan for some time. Factors such as an aging population and low nominal income growth present future headwinds to consumption growth in Japan.
The Japanese economy expanded by an annualised 0.7 percent in the second quarter of 2016, better than an initial estimate of a 0.2 percent growth. GDP Growth Annualized in Japan averaged 2.04 percent from 1980 until 2016, reaching an all time high of 12.90 percent in the fourth quarter of 1989 and a record low of -15.40 percent in the first quarter of 2009. GDP Growth Annualized in Japan is reported by the Cabinet Office, Japan
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