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Japan's economy grows at fastest pace for more than two years | |
(about 2 hours later) | |
Japan's economy grew at its fastest pace for more than two years in the second quarter as consumer spending and capital expenditure ramped up. | |
Gross domestic product expanded at an annualised rate of 4% in the April-to-June period, government data showed, beating expectations for a 2.5% rise. | Gross domestic product expanded at an annualised rate of 4% in the April-to-June period, government data showed, beating expectations for a 2.5% rise. |
The economy grew 1% compared to the previous quarter. | The economy grew 1% compared to the previous quarter. |
Japan is enjoying its longest economic expansion in a decade, buoyed by spending and investment. | |
The world's third-largest economy has been gaining strength thanks to rising exports, including smart phones and memory chips. | |
Investment tied to the Tokyo 2020 Olympics has also given Japan's economy a boost in recent months. | Investment tied to the Tokyo 2020 Olympics has also given Japan's economy a boost in recent months. |
Consumer spending | Consumer spending |
Strong domestic demand helped to offset a drop in exports during the second quarter of the year. | |
Private consumption rose 0.9% as shoppers bought big items such as cars and home appliances, and also dined out more. | |
Japan has been trying to lift consumer spending, which accounts for more than a half of the country's GDP. | Japan has been trying to lift consumer spending, which accounts for more than a half of the country's GDP. |
The latest figures could be a help to Prime Minister Shinzo Abe who pledged to reignite growth and spending through his Abenomics reforms. | The latest figures could be a help to Prime Minister Shinzo Abe who pledged to reignite growth and spending through his Abenomics reforms. |
Mr Abe has seen his popularity sink recently over a series of scandals including claims he exploited his political power to help a friend. | |
Falling prices | |
Japan has battled years of deflation, or falling prices, and slow growth following an equity and property market bubble in the early 1990s. | |
The Abenomics programme, a mix of monetary easing, government spending and structural reforms, was designed to reignite the once-booming economy and lift consumer prices. | |
Falling prices can discourage spending by consumers, who might put off purchases in the hopes that prices will drop further. | Falling prices can discourage spending by consumers, who might put off purchases in the hopes that prices will drop further. |
That hurts businesses, as it can stop firms from increasing production, hiring new staff or increasing wages. | |
Shinke Yoshiki, chief economist at Dai-ichi Life Research Institute said the latest growth figures were a "good result and tailwind for Abenomics." |