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As per the reports by Japan Times, A positive outcome will keep speculations of an early election and a potential change in bank policies. Under certain circumstances, Prime Minister Kishida is likely to call an election before the end of this year.
GDP has expanded at a pace of 1.6% in the starting three months of the year, exceeding the expectations of Japanese analysts. This also means that the technical recession which Japan faced last year has also drifted away. As per some sources, it showed the strongest GDP growth since the last year.
The main drivers behind this were the spending by consumers and businesses. The recent openings for tourists and other incoming travelers also helped in this rate going high. As per the outlook, Demand grew at the rate of 1.8%.
Muto, an economist at Sumitomo Life Insurance has stated that where the economies of the world are holding up, Japan is just recovering from Post COVID expenditure. She has also highlighted that it’s good timing for politics to step in for an election.
Japan being the third largest economy has faced both headwinds and tailwinds to gain more momentum towards post-pandemic recovery.
However, some weaker overseas demand will hurt some exports and become one of the things that deter capital investments from the companies.
Ueda also expects inflation to fall for this fiscal year as some cost-pushing factors in energy and commodities fade.
However, while most of the world has focused on reducing the inflationary pressure, Deflation has made Japan more cautious in the past few decades. Recently, Electricity bills surged across the nation although not directly impacting core- inflation but as an attempt to boost it, as per analysts.
- Kratika Agarwal
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