Japan’s economy grew faster than expected during the second quarter, with GDP growing 1% on an annualized basis, ahead of median consensus estimates at 0.4%, and marking its fifth consecutive quarter of growth, based on the figures released on Friday.

Growth during the quarter was fueled by a surge in exports ahead of U.S. tariffs, but economists worry that exports could suffer as companies begin passing the costs onto consumers over the next few months, according to a report by Reuters.

See Also: US To Rectify ‘Regrettable’ Error In Japanese Tariff Order, Promises To Refund Excess Duties

Shinichiro Kobayashi, principal economist at Mitsubishi UFJ Research and Consulting, says, “It’s possible the economy could slip into decline in the July-September quarter as exports slow.” The strong GDP performance should also give the country’s central bank some of the conditions it needs to resume interest rate hikes.

This comes as China’s economy loses momentum in July, with retail sales growing just 3.7% from the prior year, falling short of estimates at 4.6%. Industrial output growth and fixed assets investment, too, were underwhelming, at 5.7% and 1.6%, coming in below expectations at 5.9% and 2.7%, respectively, according to a report by CNBC.

Market Reactions

Japan’s benchmark Nikkei 225 index is up 387 points, or 0.91%, trading at 43,036.46 on Friday, led by industrials, mining and financial services companies.

U.S. stock futures are mixed on Friday morning, with Dow Jones Futures up 0.62%, or 279 points, trading at 45,276.00, S&P 500 Futures trading at 6,499.75, up 0.15% and 9.25 points, while Nasdaq Futures trade down 0.05%, or 12.25 points at 23,918.75.

The U.S. Dollar Index (DXY) is down 0.15% on Friday, against a basket of foreign currencies, trading at 98.056 at the time of writing this.

Crude oil futures are down 0.25%, trading at $63.81 per barrel, ahead of President Donald Trump and Russian President Vladimir Putin’s much-anticipated meeting in Alaska on Friday.

Photo Courtesy: Czerep rubaszny on Shutterstock.com

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