Japan’s economy grew more than expected in the second quarter, helped by improved household spending and rebounding from a contraction in the previous quarter, but global trade tensions loom as major risks to the export and investment outlook.
The economy grew 1.9 percent on an annualized basis in April-June, more than the median estimate for a 1.4 percent annualized increase. The economy is expected to continue growing due to consumer spending and business investment, but there is growing unease about the pace of future growth.
The rift between Japan and the United States presents a potential headwind to growth.
The United States has pressured Japan for a bilateral free-trade agreement as a way to lower the U.S. trade deficit.
Japan has repeatedly said it prefers multilateral trade negotiations, which puts it at loggerheads with the United States.
U.S. President Donald Trump is trying to re-negotiate the U.S. trade relationship with other countries to curb practices which he says are unfair to U.S. companies and workers.
This has led to an increase in tensions between the United States and China as the world’s two largest economies slap retaliatory tariffs on each other.