Japan’s economy grows 1% despite Trump’s higher tariffs
TOKYO—The Japanese economy grew at a better than expected 1 percent annual pace in the second quarter, boosted by exports that held up despite higher tariffs by the United States.
US President Donald Trump imposed a 25-percent tariff on Japanese imports starting April. But this was lowered to 15 percent this month in exchange for $550 billion in Japanese investments which Trump announced in July.
Beating earlier estimates by analysts, Japan’s gross domestic product (GDP) expanded 0.3 percent in the April-June period compared with the previous quarter.
This marked Japan’s fifth straight quarter of growth—with exports up 2 percent as companies brought out their goods in a rush before the 15-percent tariff took effect.
Other growth factors
Preliminary data from the Cabinet Office also showed capital investment increasing to 1.3 percent.
A surge in visits by foreign tourists further contributed to economic growth, although this had also raised resentment among some Japanese upset over various aspects of dealing with outsiders.
But consumer spending remained relatively weak at a modest 0.2 percent, as prices continued to rise amid stagnating wages.
The country still had a stronger than expected economic performance, and Japan’s central bank may push ahead with raising its benchmark interest rate from its long-standing level near zero to help cap inflation.
Tokyo’s key stock indexes closed at fresh all-time highs on Friday, following the release of data on Japan’s economy.
The 225-issue Nikkei Stock Average climbed 729.05 points, or 1.71 percent, from Thursday at 43,378.31. The broader Topix index finished 49.73 points, or 1.63 percent, higher at 3,107.68.
Bank shares attracted buying on hopes for improved profits amid speculation that the interest rate may be raised sooner than expected.
Receding concern
Brokers also said stocks rose almost across the board after investors were relieved to see the limited impact of higher US tariffs.
“The GDP data helped dispel concern that the economy would be dampened, giving relief to investors to buy stocks,” said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank.
Japan’s key stock indexes renewed record closing highs three times this week amid the receding concern over the impact of US tariffs.
