Japan's GDP expands in Q2 after Covid curbs lifted

The world's third-largest economy grew 0.5% quarter-on-quarter due to stronger consumption and capital investment.

While the country never imposed strict stay-at-home orders during the pandemic, the government in March lifted virus restrictions primarily targeting business opening hours.

Inbound tourism remains limited to group tours, however, and the economy is facing headwinds — from the energy price crisis to fears of a global recession fueled by biting inflation.

From April to June, private consumption grew 1.1% compared with the 0.3% registered in the January-March quarter, according to the data released by the Cabinet Office.

Capital spending expanded 1.4%, compared with a 0.3% contraction in the previous quarter.

"After the government lifted a quasi-state of emergency in late March, consumption of services showed a relatively strong rebound, while capital investment returned to growth after staying low for a while," BNP Paribas said in a note issued before the GDP data release.

Mitsubishi UFJ Research and Consulting also noted that "as the spread of the Omicron variant subsided, private consumption steadily increased, especially in-person services, and lifted the overall economy."