- Marcel Thieliant, Capital Economics
Japan's economy contracted at an annual 1.2% pace in the second quarter from the previous three-month period, while economists warned a slowdown in China and a turmoil in equity markets might undermined an expected recovery in the second half of the year. Yet, the world's third biggest economy shrank at a slower pace in the reported period than initially estimated as inventories were revised higher. Measured on a quarterly basis, the Japanese economy contracted 0.3%, compared with the initial estimate of a 0.4% slide and following the 1.0% expansion in the first quarter. Public inventories contributed 0.3 percentage points to the economic output instead of 0.1 percentage points thought earlier.
Meanwhile, a separate report showed Japan's current account surplus ballooned in July, as weaker yen boosted income from overseas investments, while Japan's goods and services gap shrank. The unadjusted current account surplus stood at 1.81 billion yen in July, compared with a 1.75 trillion yen surplus predicted by economists, and marking the largest surplus in five years form the month of July. In addition to that, July marked the 13th straight month of current account surpluses.
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