Japan's economy shrank much less than expected in the second quarter as companies made strides in restoring output after the devastating earthquake in March, but a soaring yen and slowing global growth cloud the prospects for a sustained recovery.
Analysts expect the world's third-largest economy to rebound in July-September, probably expanding at the fastest rate among major industrialised nations as exports and factory output return to pre-disaster levels. But growing risks to this scenario could strain a depleted arsenal of policy tools.
Gross domestic product fell 0.3 per cent in the second quarter, less than a median forecast for a 0.7 per cent contraction and a 0.9 per cent decline in January-March.
The better-than-expected reading helped push up the Nikkei benchmark .N225 by about one per cent, which has also tracked gains in global markets last week supported by a short-selling ban on financial stocks in Europe.
City A.M. Reporter