The Japanese Gross Domestic Product (GDP) rose stronger than the analyst expectations in the second quarter, as stronger consumer spending and better-than-expected capital investment offset lower exports.
The Japanese economy witnessed an annual growth rate of 1.8 percent from April to June. This expansion came after a revised growth of 2.8 percent in the first three months, making it the best two quarters since the first half of 2017.
The quarter-over-quarter growth reached 0.4 percent, following an upwardly revised expansion of 0.6 percent. That was above analysts’ projections of 0.1 percent.
However, flexible domestic demand will not prevent any negative repercussions from the tensing U.S.-China trade war and its impact on the global economy.
Growth is expected to continue in the third quarter, especially if consumers continue to spend before the tax increase, before a sharp contraction in the fourth quarter.
This unexpected increase in GDP may prompt the Bank of Japan to prevent the yen from unwanted rising by bearing the temporary market-driven declines in long-term interest rates.
Japan's government bond yields (JGB) hit a three-year low on Friday even as the BOJ cut its long-term bond purchases to prevent the yield on 10-year bonds from falling significantly below its 0% target.
Meanwhile, the Japanese yen fell 0.28 percent against the U.S dollar to
reach 105.77 yen per dollar, the highest level in seven months.