Japan’s economy likely continued to grow at a solid pace in the second quarter of the year, even though the recent wide divergence between various measures of consumer spending raises question marks about the exact speed. However, the recovery may have slowed at the beginning of the third quarter as the confidence boost from “Abenomics” seems to have faded. Business and consumer surveys have started to fall, and industrial production has become more volatile. Companies still appear reluctant to pass on higher profits from the weak exchange rate to employees, so consumer spending may come under pressure as inflation is rising.
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