HSBC Economists Highlight Risks Amid Japan's Economic Recovery

Japan's first-quarter GDP data supports the view that economic growth is recovering, according to HSBC economists. However, risks are accumulating as global trade momentum slows and a weaker yen increases import costs. According to Jin10, the economists noted that while the Bank of Japan's policy normalization is proceeding as planned, interest rate hikes may be imminent, though the central bank might prefer to act cautiously. The report indicates that Japan's economy has expanded for the second consecutive quarter, yet its underlying condition is not entirely clear. Net exports contributed significantly to the growth, while household and corporate momentum remains stable but has not broadly recovered. Consumer confidence has softened, and inflation expectations have risen sharply. Additionally, despite strong exports, tourism demand may weaken due to increased aviation fuel prices and flight disruptions caused by Middle East conflicts.