The gross domestic product increased by 0.5 % in the second quarter, but inflation begins to weigh on household consumption and economic activity.
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The Japanese rediscover the joys of the evenings in the restaurant and karaoke, for the greatest good of a Japanese economy which finally found its level before the pandemic due to the coronavirus. However, an upturn threatened by dark perspectives, especially in terms of inflation. Aware of the people’s concerns on this point, Prime Minister Fumio Kishida called on Monday, August 15, his government to “do everything in front of the current emergency”. “The outbreak of the prices of basic necessities, including bread and noodles, is very worrying,” said Kishida, who dreads a jump of more than 20 % of wheat prices from October.
The concern tempered the announcement, a few hours earlier, of a gross domestic product (GDP) up 0.5 % between April and June, or 2.2 % over a year. The Japanese economy has grown for the third consecutive trimester, which allowed it to slightly exceed the level of the last quarter of 2019, just before the pandemic.
weakness of the yen
The increase in individuals’ spending, 1.2 % compared to the previous quarter, has greatly contributed to it. “The leap of consumption was fired by the restaurant outings, the nights of hotels and the leisure activities”, notes Naoyuki Shiraishi, of the Japanese research institute. The Japanese started out after the lifting, in March, of the displacement restrictions applied to stem a sixth wave of contamination. In parallel, capital investments of companies, carried by efforts in favor of digital transition, increased by 1.4 %, after a decline of 0.3 % between January and March.
Euphoria should not last. Besides that the increase in GDP is lower than the expectations of economists, which tabed on an increase of 2.7 %, the Japanese economy should undergo the counterposer of the world economic slowdown, which is added to the persistent weakness of the yen, nearby From 137 yen for a dollar, its lowest level for twenty-five years. All of this feeds inflation. At 2.4 % in June, it does not reach the levels of the United States or Germany, where it jumped 8.5 % and 7.5 % respectively. However, it displeases Japanese people accustomed to low price variations during the long period of deflationary pressures initiated in the late 1990s-and which seems to touch its end.
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