Japan April-June GDP up annualized 1.1 pct

The reading represents a 1.1 pct annualized rise, marking the third straight quarter of economic expansion.

Growth was backed by a decline in imports, partly reflecting reduced oil imports from the Middle East amid deteriorating conditions around Iran, as well as by increased government spending.

Private consumption, the main pillar of domestic demand, posted a decline of less than 0.1 pct. Although the drop was slight, it was the first negative reading in eight quarters, pressured by lower tobacco sales following price hikes for heated tobacco products and reduced electricity consumption for heating due to higher temperatures.

Meanwhile, consumption was supported by stronger vehicle sales after the abolition of the environmental performance tax on automobile purchases and by last-minute demand for air conditioners ahead of the introduction of stricter energy-saving standards in April next year.

Capital investment fell 1.2 pct, down for the second consecutive quarter, reflecting a decline in spending on research and development services following patent transfers abroad by pharmaceutical companies.

Government spending rose 1.6 pct, up for the fifth consecutive quarter, thanks to higher medical expenses following revisions to medical service fees, as well as an expansion of free high school tuition and the introduction of free school lunches at public elementary schools.

Public investment fell 0.1 pct, the first decline in two quarters.

Exports rose 0.5 pct, up for the third consecutive quarter despite lower goods shipments, as exports of research and development services expanded due to overseas patent transfers. External demand boosted GDP by 0.5 percentage point, also thanks to a 1.5 pct decline in imports.

In nominal terms, April-June GDP rose 1.2 pct quarter on quarter, for an annualized increase of 4.8 pct.