Japan's Economy Expands 0.3 Percent in Q2 as Exports Rebound
(MENAFN) Japan’s economy showed a modest recovery in the second quarter of 2024, expanding by 0.3% compared to the previous quarter, driven largely by a rebound in exports after a contraction in the prior three-month period.
This growth surpassed analysts' expectations, which had predicted a more modest 0.1% increase in the nation’s gross domestic product (GDP), according to data released by Japan’s trade ministry on Friday. The ministry also revised the first quarter’s GDP growth upward, now reporting a 0.1% expansion.
Exports played a crucial role in this recovery, contributing 0.3 percentage points to the GDP growth in the April-June period. This marks a sharp contrast to the previous quarter’s 0.8% decline.
However, when viewed on an annual basis, Japan's economy grew by 1.2% in Q2, a deceleration from the 1.8% growth recorded in the first quarter.
This growth comes at a time when the Japanese economy faces challenges due to the tariffs imposed by the United States since April. Japan only reached a trade agreement with the US on July 23, easing some pressure. The deal, which saw the Trump administration reduce reciprocal tariffs on Japanese goods to 15%, also includes a commitment from Japan to increase its investment in the US, amounting to $550 billion.
Meanwhile, Japanese automakers have faced significant setbacks due to the 25% tariff the US imposed on imported vehicles in April. In 2024, automotive exports to the US accounted for 28.3% of Japan's total exports, making the tariff’s impact especially felt.
In June, Japan’s exports to the US saw an 11.4% year-on-year decline, a deterioration from the 11% drop reported in May. Car exports to the US dropped even more sharply, plunging by 26.7% in June, compared to a 24.7% decline the month prior.
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