Japan Posts Unexpectedly Strong GDP, Helped by Resilient Exports

• Japan's economy grew much faster than expected in the second quarter as export volumes held up well against new U.S. tariffs, giving the central bank some of the conditions it needs to resume interest rate hikes this year.
• Gross domestic product (GDP) rose 1.0% on an annualised basis, government data showed on Friday, marking the fifth straight quarter of expansion after the previous quarter's contraction was revised to growth.
• However, analysts warn global economic uncertainties fuelled by U.S. tariffs could weigh on the world's fourth-largest economy in the coming months, especially as automakers struggle to keep prices down for American customers.
• "The April-June data masked the real effect of Trump's tariffs," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute. "Exports were strong thanks to solid car shipment volumes and last-minute demand from Asian tech manufacturers ahead of some sectoral tariffs. But these aren't sustainable at all."
• The increase in GDP was helped by surprisingly resilient exports and capital expenditure, and compared with median market expectations for a 0.4% gain in a Reuters poll. It followed a 0.6% rise in the previous quarter, which was revised up from a 0.2% contraction.
• The reading translates into a quarterly rise of 0.3%, better than the median estimate of a 0.1% uptick. The strong data contrasts with China, which saw factory output growth hit an eight-month low and retail sales slow sharply in July.

(Source: Reuters)