Japan's economy returns to growth in second quarter

Japan’s economy grew at a much faster-than-expected annual pace in the second quarter. Japan’s economy grew at an annual rate of 3.1 percent from April to June, rebounding from a contraction in the previous quarter. GDP grew 0.8 percent in the second quarter from the first quarter, beating expectations for a 0.5 percent increase. The strong growth supports the possibility of another interest rate hike by the Bank of Japan in the near term. Japan’s GDP contracted 0.6 percent in the January-March period after growing 0.1 percent in the October-December period of last year. Economic growth has alternated between periods of such contraction and weak expansion over the past year. “Today’s GDP figures suggest that the virtuous cycle between income and spending is becoming more pronounced, but uncertainty about macro policies is increasing,” said Robert Carnell, regional head of Asia-Pacific research at ING Economics.