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Japan’s economy rebounded in the second quarter, growing by 0.8% (3.1% on an annualised basis) after a contraction of 0.7% in the previous quarter. Private consumption and investment drove this rebound, but net trade remained weak. Overall, this should prove encouraging news for the Bank of Japan which has begun to tighten interest rates (perhaps prematurely in some people’s eyes). That said, it remains to be seen whether its economy has finally found itself on a more solid and sustainable footing — the economy has experienced quarterly contractions in output around one third of the time since 2000, while inflation has typically remained stubbornly close to zero.
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