Japan’s economy sees consumption-led rebound in tailwind for BOJ
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Japan's economy rebounded in Q2 with a 3.1% annualized growth, driven by an increase in private consumption; The rebound in personal spending is attributed to wage increases and a tax rebate; The Bank of Japan (BOJ) is looking for evidence that wage gains will spur personal spending and generate stable demand-led inflation; BOJ governor Kazuo Ueda stated that the board would continue hiking rates if economic data were in line with forecasts; The data create a supportive background for the government as the ruling Liberal Democratic Party (LDP) prepares to select a new prime minister; Private spending is expected to gain momentum with recent wage growth; Recent strengthening of the yen may soothe shoppers' concerns about price hikes; Japan's exports have increased for seven months through June, supported by demand for chip-making gear; Japan continues to benefit from inbound tourism; A record 17.8 million foreign visitors came to Japan in H1 2024, spending ¥2.1 trillion in Q2 2024; The yen has recently gained amid expectations of a narrowing US-Japan interest rate gap; The International Monetary Fund warns of a potential risk to global growth from interest rates staying higher for longer.

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