Japan's Economy Thrives Despite Tariff Pressure

Tokyo, Aug 15 (AP) – Japan's economy showed stronger-than-anticipated growth, reaching a 1% annual rate in the last quarter, thanks largely to robust export performance, which remained resilient despite the higher tariffs imposed by U.S. President Donald Trump.

The U.S. has implemented a 15% tariff on imports from Japan. While this marks an increase for certain products, it is a reduction from the 25% initially proposed by Trump.

Japan's real gross domestic product (GDP), which calculates the total value of goods and services produced by the nation, increased by 0.3% in the first fiscal quarter compared to the preceding one, surpassing analyst forecasts. This period marks Japan's fifth consecutive quarter of economic growth.

Exports from Japan rose by 2.0% during this time frame, as per preliminary data from the Cabinet Office. A 90-day suspension of elevated tariffs on most goods and with the majority of trading partners allowed companies to accelerate exports in anticipation of higher import duties. However, the 15% tariffs have now been implemented as of last week, closing this opportunity.

The influx of foreign tourists has also contributed to economic growth, despite causing some unease among residents over issues related to handling the increase in visitors. In addition to export gains, capital investment increased by 1.3% compared to the previous year, further stimulating growth. Nonetheless, consumer spending saw minimal increases, rising by only 0.2%.

Price levels have been increasing steadily even as wage growth remains stagnant. The unexpectedly robust economic results from the last quarter may prompt Japan's central bank to consider raising its benchmark interest rate from near-zero levels to manage inflation.

The heightened tariffs, part of Trump's strategy to encourage more manufacturing activity in the U.S., have compounded the challenges for Prime Minister Shigeru Ishiba. He is currently facing calls for resignation after the ruling Liberal Democrats, together with their coalition partner Komeito, failed to secure majorities in both houses of parliament. (AP)

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