Japan’s GDP Growth Masks Weak Consumer Spending and Rising Uncertainty

Japan’s latest GDP figures were supported mainly by external demand, while personal consumption remained weak. This has raised concerns that the recovery may not reflect the everyday economic reality facing households. A decline in crude oil and other commodity imports, linked to worsening tensions in the Middle East, also lifted GDP mathematically. Lower imports can increase GDP figures even when the wider economy remains under pressure. Private-sector forecasts had expected annualised growth of about 2%, but the reported figure fell short. The gap has deepened uncertainty over Japan’s economic outlook and the effectiveness of its inflation measures.

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