Positive signs for Japan’s long-suffering economy, as second-quarter growth proved far stronger than expected.

Government figures show GDP rose 0.6% between Q1 and Q2, much higher than analysts’ forecasts of 0.2%.

Such growth – the sixth consecutive quarterly expansion – translates into an annual GDP rise of 2.3%, the highest rate since Q3 last year.

Driving the second-quarter increase were a 1.3% rise in private-sector capital investment and a 0.3% hike in consumer spending, which accounts for almost 60% of GDP.

That both these factors are domestic is significant, as in previous quarters growth has been spurred by external forces such as exports. This quarter, however, exports increased just 1% as the SARS virus hit trading with other Asian nations.

Nevertheless, analysts remain cautious on prospects for a full-blown recovery. The chief cause for concern is continued deflation, which stood at –2.1% in Q2.

Data sourced from: multiple sources; additional content by WARC staff