Japan's Economy Surges Beyond Expectations with 3.1% Growth

Japan's economy grew at an annualized rate of 3.1% from April to June, exceeding forecasts due to increased consumption. The recovery supports potential future interest rate hikes by the Bank of Japan. Rising living costs and private consumption are key factors influencing economic trends. Capital spending and external demand also played significant roles.

Japan's economy has defied predictions, growing at an annualized 3.1% rate from April to June, a substantial rebound bolstered by consumer spending.

The Bank of Japan's optimistic outlook is validated as inflation targets seem attainable, giving credibility to potential interest rate hikes. Government data indicated a significant upward revision after a 2.3% Q1 slump.

Private consumption, comprising over half of Japan's economic output, surged by 1.0% following five quarters of decline. Rising living costs contributed to Prime Minister Fumio Kishida's decision to resign. Capital spending also saw a 0.9% rise, though external demand slightly dampened growth.

(With inputs from agencies.)