https://apnews.com/article/japan-tariffs-trump-economy-gdp-4ed873e4162c84dafc3befc81b49c6e6
In the most recent quarter, the Japanese economy grew 1% better than expected and was primarily boosted by exports. This comes despite the tariffs that were implemented by President Donald Trump. The U.S. imposed a 15% tax on all imports from Japan. However, this is a drop in tariffs for some products that were being taxed at 25%. The tariffs of 15% are still higher than the tax before the tariffs, but the drop from 25 to 15% enables more growth opportunities. Japan's GDP grew 0.3% compared to the previous fiscal quarter, which beat the analysts' estimations. Japan has experienced 5 straight quarters with fiscal growth, and a lot of the growth can be attributed to the 90-day break in tariffs, which allowed for businesses to rush ship products. This increased the country's exports by 2% during the break in tariffs.
The growth can also be attributed to the increased number of tourists visiting, which has helped economically by boosting economic growth. However, there has been a sense of resentment among residents as they now have to deal with more foreign visitors and the aspects that come with that. In addition, capital investment increased by 1.3% which is helping drive growth at a faster rate, but consumer spending remained weak at a 0.2% growth. With there being growth seen in the economy, Japan's central bank may go ahead to raise the benchmark interest rate to help cap inflation.
2 comments:
Japan’s economy grew even with the tariffs, which is surprising. Most of that came from exports and investment, while consumer spending barely moved. If rates go up, it might get harder to keep the momentum going once the boost from tourism and the tariff break fades.
As tourism is seeing historic growth rates this year, the strain on resources and overwhelming traffic will have to be taken into consideration. For a lot of major tourism destinations, a system of two-tier pricing has been implemented, where the cost of goods/services for tourists is more than what the locals have to pay. Perhaps this could be the solution for Japan to decrease the number of tourists visiting while seeing more economic growth.
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