Japan’s economy growing, but political uncertainty poses risk

TOKYO

Japan’s economy grew at an annual rate of 2.9 percent, slower than the earlier report for 3.1 percent growth, in the April-June period, boosted by better wages and spending, revised government data showed yesterday.

That shows clear risks remain, including U.S. economic growth, which greatly affects export-reliant Japan. Political uncertainty in Japan is another risk as the ruling party picks a new leader.

About a dozen candidates are seeking to succeed Prime Minister Fumio Kishida as head of the Liberal Democratic Party. The winner of its Sept. 27 vote is a near-certainty to be the next prime minister since the party controls parliament.

The world’s fourth-largest economy grew 0.7 percent in the fiscal first quarter, according to the Cabinet Office, rebounding from the contraction in the previous quarter.

Seasonally adjusted real gross domestic product, or GDP, measures the value of a nation’s products and services. The annual rate shows how much the economy would have grown or contracted, if the quarterly rate continued for a year.

Yesterday’s GDP data showed domestic demand grew a robust 3 percent from the previous quarter on the back of healthy household consumption and private sector investments, as well as government investments. Exports grew a booming 6.1 percent, even better than the earlier reading for 5.9% growth.

Japan’s GDP shrank 0.6 percent in January-March on quarter, after eking out 0.1 percent growth in October-December last year.

The weakening of Japan’s economic clout is a pressing concern for a nation, which the IMF projects will slide into fifth place, after the U.S., China, Germany and India in coming years at the current rate.