TOKYO: Japan’s economy grew at a faster pace than expected in the second quarter of the year as personal consumption rebounded after the impact of vehicle production suspensions caused by makers’ testing irregularities waned, government data showed Thursday.

Gross domestic product increased at an annualized rate of 3.1 percent in the April-June period, adjusted for inflation and seasonal factors, the Cabinet Office said in a preliminary report. The reading exceeded a median estimate of a 2.3 percent rise in a Jiji Press survey of private think tanks.

Private consumption, a major engine of growth, rose 1.0 percent from the previous quarter, the first gain in five quarters, owing to a recovery in vehicle purchases and higher spending on dining out.

Corporate capital spending grew 0.9 percent, led by vehicle-related investment. Public investment climbed 4.5 percent, the first rise in four quarters.

Exports gained 1.4 percent, led by brisk vehicle shipments. Imports advanced 1.7 percent, driven by higher demand for business-use computers.

Domestic demand made a positive contribution of 0.9 percentage point to the quarter-to-quarter GDP growth rate of 0.8 percent, its first positive reading in five quarters, while external demand made a negative contribution of 0.1 point.

“The boost from private demand is remarkable,” economic and fiscal policy minister Yoshitaka Shindo said of the second-quarter growth at a press conference.

Before inflation adjustment, GDP totaled 607,903.7 billion yen on an annualized basis, topping 600 trillion yen for the first time ever and achieving a target set by the administration of then Prime Minister ABE Shinzo in 2015.

This “became a big milestone for realizing a transition to a new economic stage,” Shindo said.

GDP, before inflation adjustment, expanded at an annualized rate of 7.4 percent.

JIJI Press