Japan’s economic system recorded spectacular progress within the second quarter of 2023, authorities knowledge confirmed on Tuesday, proof that the nation is lastly recovering from the Covid doldrums, whilst indicators of serious challenges stay.

Economic output in Japan grew by an annualized price of 6 % within the second three months of the yr, the nation’s Cabinet Office stated. It was the third consecutive quarter of growth, following a revised studying of three.7 % progress within the January-to-March interval and a slight bump of 0.2 % the quarter earlier than that.

The fast growth was fueled by a powerful efficiency by the nation’s export sector. The second-quarter determine got here as a shock to analysts: While they’d anticipated Tuesday’s knowledge to indicate wholesome progress, the end result greater than doubled economists’ common forecasts in a ballot by Bloomberg.

Still, even with the spectacular progress, a better have a look at Tuesday’s underlying knowledge — notably a decline in home consumption — left loads of room for concern, stated Sayuri Shirai, a professor of economics at Keio University and a former board member of the Bank of Japan.

Although Japan’s gross home product has lastly recovered to its prepandemic dimension in actual phrases, “the content is not really strong,” Ms. Shirai stated. She added that “the only reason that we have stronger-than-expected G.D.P. growth comes from the external side,” referring to exports and a surge in inbound tourism.

Households and firms alike are spending much less at residence. “It’s really suggesting that the domestic economy is not doing well,” she stated.

Japan is the world’s third-largest economic system, and the biggest creditor by far. That signifies that its financial efficiency reverberates throughout the globe.

Covid didn’t hit Japan’s economic system as exhausting because it did different nations. But the injury has been longer lasting, partly due to provide chain woes in its export-heavy economic system attributable to the pandemic, and since the nation was slower to roll again virus precautions than a lot of its peer nations.

Tuesday’s knowledge signifies that Japan is lastly catching up. Strong export progress means that world logistics networks have largely labored out the kinks that throttled provides of crucial parts to Japan’s auto sector and different industries.

The nation has additionally benefited from the flood of vacationers that has adopted the elimination of journey restrictions that had saved most guests out till November. More are more likely to be coming after China final week lifted a ban on group excursions to Japan and different nations.

Tuesday’s knowledge “is good news for exporters and manufacturers; it’s good news for the service industry,” stated Stefan Angrick, a senior economist at Moody’s Analytics in Japan.

Domestic spending, nevertheless, has not saved tempo. In truth, flagging imports accounted for a part of the robust contribution from exports.

“Most people had been hoping and expecting that the domestic recovery would have a little bit longer to run,” Mr. Angrick stated. “The fact that it’s only the second quarter of 2023 and there are question marks everywhere isn’t a good thing.”

Spending has slowed at residence partly due to weak point within the yen. Japan is extremely depending on imports for meals and power, and the Japanese foreign money’s decades-long lows in opposition to the greenback have pushed up prices, feeding ranges of inflation unseen within the nation for a era.

The foreign money’s depreciation has largely been pushed by Japanese financial coverage, which has saved the nation’s rates of interest at all-time low even because the United States and different nations have ratcheted them up.

The anemic yen has been a double-edged sword for the economic system, stated Takahide Kiuchi, an economist on the Nomura Research Institute.

“It can be a positive for exporters, increasing competitiveness and revenue,” he stated. “However, it could undermine consumption.”

Japan has lengthy suffered from sluggish financial progress. Corporate earnings and wages have been depressed for many years, and the issues have appeared more likely to worsen as Japan’s inhabitants shrinks and ages at a fast clip, which means fewer employees and shoppers alike.

The nation has labored to beat its financial inertia with monumental authorities spending and the super-low rates of interest, which are supposed to encourage corporations and households to borrow and spend.

But for years progress has remained weaker than hoped, and the nation’s mounting debt, mixed with the yen’s weak point, have put strain on the Bank of Japan to rein in its largess.

Izumi Devalier, the chief Japan economist at Bank of America, stated that Tuesday’s figures might assist set the stage for the Bank of Japan to begin unwinding its ultra-easy financial coverage, a objective that has been lengthy stymied by balky progress.

The financial institution’s insurance policies are supposed to create a virtuous cycle wherein rising company earnings push up stagnant wages. And Tuesday’s knowledge might counsel “that virtuous cycle is taking shape,” Ms. Devalier stated.

Still, a excessive reliance on exports makes the latest progress weak to different nations’ malaise. Recent softness in China, Japan’s largest commerce companion, is a specific supply of fear.

“We see clear signs of slowing in China and Europe,” Mr. Kiuchi, of the Nomura Research Institute, stated. That means “the stability of this high growth is unclear.”