News in brief: Japan’s first quarter GDP growth exceeded expectations, signaling a post-pandemic recovery, driven by strong private spending. However, concerns remain over the country’s export sector, which has been affected by the slowdown in major economies.
Japan has emerged from its post-pandemic recession with its first quarter gross domestic product (GDP) rise beating market expectations.
Unlike many other countries, Japan has relied the most on services like tourism for its earnings with agriculture contributing only a little over 1% for the past decade. It is little wonder why pandemic travel restrictions plunged the country into financial problems. However, since lifting those restrictions, its economy is on the way to recovery.
Experts had expected Japan’s economy to grow by 0.7% YoY but it did better by more than twice, coming in at 1.6% growth. Even private spending on consumer goods, services, housing, leisure and so on did better than expected.
While the country’s economy is expected to keep recovering, there are concerns about its export sector. Exports fell by 4.2% in q1 2023 and there is no assurance that it will get better. Japan’s biggest customers, the US, European Union, and China are seeing their economies slow down. Experts believe that growing domestic demand and slowing overseas exports may cancel out each other.
Shigeyuki Goto, Japan Minister of Economy, said that rising prices pushed its nominal GDP to a record 570.1 trillion yen ($4.22 trillion) during the first quarter. Items like fuel and food became more expensive in the country and pushed inflation to more than 2%. There are analysts who expect Japan to raise wages to reduce burden on households.
