By Leika Kihara and Tetsushi Kajimoto
TOKYO (Reuters) – Japan’s economy rebounded more than expected in the second quarter after slumping in the first three months of this year, data showed, a sign consumption and capital expenditure were recovering from the coronavirus pandemic’s initial hit.
But many analysts expect growth to remain modest in the current quarter as state of emergency curbs reimposed to combat a spike in infections weigh on household spending.
The world’s third-largest economy grew an annualised 1.3% in April-June after a revised 3.7% slump in the first quarter, preliminary gross domestic product (GDP) data showed, beating a median market forecast for a 0.7% gain.
Still, the rebound was much weaker than that of other advanced economies including the United States, which marked a 6.5% annualised expansion in the second quarter, highlighting the fallout from Tokyo’s struggle in containing the pandemic.
On a quarter-on-quarter basis, GDP grew 0.3% compared with market forecasts for a 0.2% increase, the data showed.
Consumption rose 0.8% in April-June from the previous quarter after a 1.0% drop in January-March. Capital expenditure also increased 1.7% after falling 1.3% in the previous quarter, the data showed.
Domestic demand contributed 0.6% point to GDP growth.
Exports rose 2.9% in April-June from the previous quarter in a sign the global recovery continued to underpin the world’s third-largest economy.
Japan’s economy emerged from last year’s initial blow from the pandemic thanks to robust exports, though slow vaccinations and repeated state of emergency curbs have hurt consumption.
A spike in Delta variant cases in Asia has caused supply chain disruptions for some Japanese manufacturers, which could weigh on factory output and add to gloom for an already fragile economic recovery.
(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Sam Holmes)
