Japan’s economy grew 6% in the second quarter, far more than expected

Japan’s economy posted its third straight quarterly expansion, provisional government data showed Tuesday, as robust export growth helped the world’s third-largest economy expand 6% in the second quarter, handily beating market expectations.

Economist surveyed by Reuters had expected the world’s third-largest economy to post 3.1% growth in the April-June quarter. Quarter-on-quarter, the Japanese economy expanded 1.5%, topping expectations for 0.8% growth.

The benchmark Nikkei 225 index extended gains to trade up nearly 1%, while the Japanese yen pared losses against the U.S. dollar.

“Japan’s economy expanded at an extremely rapid pace last quarter, but we expect a renewed slowdown across the second half of the year,” Marcel Thieliant, head of Asia-Pacific at Capital Economics, wrote in a note.

“However, the details of the report weren’t as impressive as the headline,” he added. “Instead, nearly all of the increase in output was driven by a 1.8%-pts boost from net trade. That marked the second-largest contribution from net trade in the 28-year history of the current GDP series, with only the bounce back in exports from the first lockdown at the beginning of the pandemic providing a larger boost.”

Private consumption expenditure fell 0.5% in the second quarter from a year ago, while capital expenditure was flat, pointing to muted domestic demand and underscoring an anemic post-Covid pandemic recovery.

This is a developing story. Please check back for more updates.