Japan's Economy Posts Modest Growth Amid Global Headwinds

Despite headwinds from the war in Iran and surging energy costs, Japan's economy managed to grow at an annual rate of 1.1% in the April-June quarter.

The government data released Monday showed that private consumption stayed flat during this period, while exports declined by 0.5%. However, exports were driven by strong global demand for Japanese autos and semiconductors, with companies like Toyota Motor Corp. and Honda Motor Co. benefiting from the trend.

Government consumption rose 1.6% during the quarter, but a weak yen has made it more expensive to import raw materials, raising prices for consumers and denting spending. The war in Iran has also sent energy costs surging, making it difficult for resource-poor Japan, which imports almost all its oil.

Prime Minister Sanae Takaichi has promised to boost growth, but her public support ratings have been gradually sinking as concerns about rising prices and stagnant wage growth grow. The Bank of Japan recently raised its economic growth outlook to 0.6% for the fiscal year through March next year, from an earlier 0.5%.