Japan’s economy has begun to grow again as consumers, fatigued from more than two years of the pandemic, moved away from precautions that have kept coronavirus infections at among the lowest levels of any wealthy country, the New York Times reported. Lockdowns in China, soaring inflation and brutally high energy prices could not suppress Japan’s economic expansion as domestic consumption of goods and services shot up in the second three months of the year.
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The world’s third largest economy recovered to its pre-pandemic size in the second quarter, as consumer spending picked up following the end of coronavirus curbs on businesses, Bloomberg News reported. Gross domestic product grew at an annualized pace of 2.2% in the second quarter of this year, coming in below the median estimate of 2.6%, Cabinet Office data showed Monday. That lifted the size of the economy to 542.1 trillion yen ($4.1 trillion), above what it was at the end of 2019. First quarter GDP was revised to an expansion from a prior contraction.
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Credit Suisse Group AG has applied to the English High Court to initiate formal legal proceedings against Japan's SoftBank Group Corp. over a $440 million dispute, one source familiar with the matter said on Thursday, Reuters reported. Switzerland's second-largest bank is trying to recover funds that Greensill Capital, a defunct finance firm, had lent to Katerra, a SoftBank-backed U.S. construction group that filed for bankruptcy last year.
Japanese bank lending rose 1.8% in July from a year earlier, accelerating from the previous month, as some companies borrowed more to meet rising raw material costs amid a surge in global commodity inflation, Reuters reported. Outstanding loans held by the country's four main categories of banks, including "shinkin" or credit unions, hit a record 588.232 trillion yen ($4.36 trillion), Bank of Japan (BOJ) data showed on Monday.
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The Bank of Japan won't make any quick or drastic changes to its monetary policy framework and is likely to keep interest rates low, even as this week's board reshuffle brought in less dovish members, former BOJ policy board member Sayuri Shirai said on Tuesday, Reuters reported. "Japan's neutral rate is very low... Together with inflation expectation, Japan's nominal interest rate will be low," Shirai told the Reuters Global Markets Forum (GMF).
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Japan's government slashed its economic growth forecast for this fiscal year largely due to slowing overseas demand, highlighting the impact of Russia's war in Ukraine, China's strict COVID-19 lockdowns and a weakening global economy, Reuters reported. The forecast, which serves as a basis for compiling the state budget and the government's fiscal policy, included much higher wholesale and consumer inflation estimates as surging energy and food costs and a weak yen push up prices.
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The Bank of Japan is set to raise its inflation forecast on Thursday but maintain ultra-low interest rates and warn of risks to a fragile economy, reinforcing its position as an outlier in a wave of global increases to borrowing costs, Reuters reported. The decision will come hours before that of the European Central Bank, which will consider a bigger-than-expected 50-basis-point rate increase to tame soaring inflation.
U.S. Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki agreed on Tuesday to work together to tackle rising prices of food and energy, as well as volatility in currency markets, exacerbated by Russia's war in Ukraine, Reuters reported. They said that the war had raised exchange rate volatility, which could pose adverse implications for economic and financial stability, and pledged to cooperate "as appropriate" on currency issues.
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Japan spent nearly 30 trillion yen less in the last fiscal year than it had planned for a second year running, which analysts said raises questions about whether stimulus measures like those adopted during COVID-19 could be implemented more efficiently, Reuters reported. The Ministry of Finance said on Tuesday there was an excess of some 22.4 trillion yen ($161.41 billion) in the budget for fiscal year 2021, which ended in March, mostly unspent pandemic support funds.
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Japan's services sector activity expanded at the fastest pace in over eight years in June as the easing of coronavirus curbs boosted sentiment among businesses such as those in tourism, Reuters reported. The pick-up in activity is welcome news for a government betting on domestic demand to put the world's third-largest economy firmly on a recovery track and help overcome production pressures on the country's manufacturing industry.
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