Japan’s economy has officially emerged from recession, boosted by increased household spending following the COVID-19 pandemic, according to new data released on Wednesday. The figures reveal a 1.6 percent growth in GDP from January to March, surpassing predictions and signaling the economy’s first expansion in three quarters.
The growth can be attributed to a surge in private consumption, which accounts for nearly half of the economy, as the pandemic situation improved. However, economists caution that the outlook remains uncertain due to signs of an economic slowdown in the United States, Europe, and China.
Japan’s exports have been heavily impacted by weak overseas demand, resulting in a 4.2 percent decline in the same period. This marks the first decrease in exports in six quarters, highlighting the challenges faced by the world’s third-largest economy.
The Bank of Japan now faces the task of determining when to phase out its significant stimulus program. Additionally, rising fuel and food costs have pushed Japan’s consumer inflation above the central bank’s 2 percent target, which could potentially affect consumption unless there are sustained wage increases.
While Japan’s economy has shown positive growth, uncertainties persist, especially regarding the global economic landscape and the potential impact on exports. The country’s central bank will need to carefully monitor these factors to navigate the path forward and sustain the recovery.
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