Japan's economy rebounds after first dip in two years

Japan's economy rebounds as consumers companies spend more

Japan's economy returns to growth in Q2

External demand - or exports minus imports - was expected to add 0.1 percentage point to growth, the poll found, the same rate of contribution seen in the first quarter.

Japan's economy returned to growth in the second quarter following its first contraction in two years, official figures showed today, but fears of United States trade wars clouded the outlook.

The economy grew 0.5 percent quarter-on-quarter in the April-to-June period, compared with a 0.2 percent decline in the first quarter, according to data from the Japanese Cabinet Office.

The economy's contraction in the first quarter snapped its longest streak of growth since the boom days of the late 1980s.

While analysts expect the economy to sustain a recovery, some expect escalating global trade disputes will hurt the export and manufacturing sector, major drivers of growth in the world's third largest economy. The country's big automakers, including Toyota, Nissan and Honda, are anxious about US President Donald Trump's threats to impose tariffs on vehicle imports.

Trump's talk of tariffs on vehicles imported into the world's No. 2 auto market remains a concern for Japanese automakers.

"Growth isn't as vigorous as previous year", Marcel Thieliant, senior Japan economist at research firm Capital Economics, said in a note to clients.

"Since the automakers have vast supporting industries, the impact of the tariffs would spread widely", Mr Shimoda told AFP.

Kentaro Arita, senior economist at Mizuho Research Institute, estimated the U.S. tariffs could cost Japan's auto industry as much as US$10 billion.

Mr Abe launched the pro-spending "Abenomics" policy blitz after taking office in late 2012, combining ultra-loose monetary policy and fiscal stimulus in a bid to boost the country's economy.

Business investment jumped 1.3 per cent following a 0.5 per cent gain in the previous quarter, thanks partly to booming construction ahead of the 2020 Tokyo Olympics.

GDP private consumption was up 0.7 percent on quarter, topping forecasts for 0.2 percent after easing 0.1 percent in the three months prior.

Also on Friday, the Bank of Japan said that producer prices in Japan were up 0.5 percent on month in July.

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