Japan's economy exhibited stronger growth than initially forecasted, with a Q1 annualized GDP increase of 2.7%, exceeding the expected 1.9%. The revision indicates resilient corporate sentiment and robust inventory contributions, even amid global economic slowdown concerns. This economic upswing, paired with stocks at their highest in over thirty years, might influence Prime Minister Fumio Kishida's decision for an early election. With Covid-19 restrictions lifted and a resurgence in foreign tourism, Japan is catching up to its global counterparts. Nevertheless, the interplay of inflation and wages will determine the sustainability of this recovery and potential changes to the Bank of Japan's ultra-loose policy. Despite positive economic indicators, household spending declined in April, hinting at the possible impact of rising prices.
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