Japan GDP Upgrade Could Pave Way for Tax Hike

Japan’s economy expanded at a much faster pace than initially estimated in the three months through June, the government said Monday, suggesting the environment necessary for a sales tax hike is being established.

With the success of Tokyo’s bid to host the 2020 Summer Olympics sparking hopes of benefits to the Japanese economy through industries such as construction and tourism, some analysts believe the barriers to Prime Minister Shinzo Abe’s plan to implement the tax hike as scheduled next year have been almost removed.

The economy grew at an annualized rate of 3.8 percent during the second quarter of 2013 in inflation-adjusted terms, upgraded from initial data on the back of a sharp upward revision to capital spending.

The April-June growth in real gross domestic product, or the total value of goods and services produced at home, corresponded to a 0.9 percent rise from the previous quarter, the Cabinet Office said.

The government said in the initial report Aug. 12 that the country’s economy expanded a real 0.6 percent on the quarter, or an annualized real 2.6 percent, during the period, buoyed by an increase in exports and healthy consumer spending.

Business investment spending grew 1.3 percent, upwardly revised from the 0.1 percent drop reported in the preliminary data, posting the first growth in six quarters.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza