Japan economy returns to black in Q2 but Trump trade wars cloud outlook

A file photo of a worker riding a bicycle in a container area at a port in Tokyo.
A file photo of a worker riding a bicycle in a container area at a port in Tokyo. PHOTO: REUTERS

TOKYO (AFP, REUTERS) - Japan's economy returned to growth in the second quarter following its first contraction in two years, official figures showed on Friday (Aug 10), but fears of US trade wars clouded the outlook.

The world's third-largest economy grew 1.9 per cent year-on-year in the April-June period, compared with a 0.9 per cent contraction in January-March, the Cabinet Office said.

The figure was better than market consensus of 1.5 per cent growth, according to Reuters poll of economists.

On a quarter-on-quarter basis, GDP grew 0.5 per cent, versus the median estimate for a 0.3 per cent increase.

Private consumption, which accounts for some 60 per cent of Japan's GDP, rose 0.7 per cent, recovering from a 0.2 per cent decline in the first quarter.

The data represented a quick turnaround after a series of eight consecutive quarters of growth ended in January-March, interrupting a winning streak not seen since the heady days of Japan's "miracle" boom of the 1980s.

But analysts warned US-led trade wars could be a major risk factor for an economy still struggling to win a long battle against deflation.