Japan's economy grew more than expected in the second quarter of 2024, as people began spending more for the first time in over a year.
According to Der Spiegel citing government data, the country's gross domestic product (GDP) rose by an annualized 3.1% from April to June, beating analysts' predictions of a 2.1% increase.
Compared to the previous quarter, the economy grew by 0.8%.
A key factor behind this growth was a 1.0% increase in private consumption, which is crucial for Japan's economic health. Previously, rising living costs, partly due to a weak yen and higher import prices, had held back household spending.
Corporate investment also contributed to the economic boost, growing by 0.9%, in line with expectations.
Not all the news was positive — foreign trade slightly hurt growth, reducing GDP by 0.1 percentage points.
This better-than-expected performance supports the Bank of Japan’s (BoJ) view that the economy could continue to recover, possibly pushing inflation closer to the central bank's 2% target.
Last month, the BoJ raised interest rates and announced plans to scale back its large bond purchases, which caught many investors by surprise.
Following the rate hike, Japan's Nikkei index initially dropped sharply but quickly recovered.
Despite these market ups and downs, the BoJ has decided to hold off on further interest rate hikes for now.
"We will not raise interest rates if the financial markets are unstable," said BoJ Vice-Chairman Shinichi Uchida last week.
