Japan’s Two-Year Growth Streak Comes to an End

Japan’s impressive streak of eight consecutive quarters of growth came to an end this month, as the third-largest global economy reported that its gross domestic product decreased at an annualized rate of 0.6 percent during the first quarter of the year.

 

Wednesday’s release of this data ends what had been the longest period of growth for Japan since the late 1980s. Expert economists point to lackluster performances by a myriad of different industries, rather than just one collapse. A combination of flat spending on investment partnered with weak consumption of private goods contributed to the contraction, which was worse than what financial analysts had predicted.

 

Net exports also decreased, possibly in small part to escalating trade tensions in the global economy. The strength of the Japanese yen against the United States dollar also makes exports including venerable Japanese automobiles and consumer electronics more expensive to global customers. The stability of the yen makes it a safe bet for foreign investors, however, this might be negated if the trade wars come to fruition.

 

Despite the weaker than expected growth, most experts do not expect Japan to slide into a recession. Most predictors demonstrate that the country will rebound with modest growth in the second quarter. The country faces an uphill in growing its economy because of factors including lower than desired inflation, an aging population requiring government subsidies, and lack of females in the workforce.

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