Japan Escapes Deflation, Creating New Strains as Q2 Growth Misses at 1.1%
Updated
Updated · Bloomberg · Aug 17
Japan Escapes Deflation, Creating New Strains as Q2 Growth Misses at 1.1%
3 articles · Updated · Bloomberg · Aug 17
Summary
Japan is finding that the end of decades-long deflation is bringing fresh economic strains rather than a clean recovery.
1.1% annualized GDP growth in Q2 underscored that problem: exports stayed firm, but private consumption was flat and capital spending fell 1.2%, showing domestic demand remains weak.
Rising energy costs and a weak yen are adding inflation pressure, squeezing households even as prices finally move higher after years of stagnation.
That mix is complicating the Bank of Japan’s next steps, with softer growth and cost-driven inflation pulling policy in opposite directions ahead of its September rate decision.