Japan's economy expanded 0.9 percent in the second quarter, according to a survey, fast enough to encourage the central bank to raise interest rates as soon as this month.

Growth in the world's second-largest economy in the three months ended June 30 probably slowed from 3.3 percent in the first quarter, according to the median estimate of 27 economists surveyed by Bloomberg News. The Cabinet Office will release gross domestic product at 08:50 A.M. on Aug. 13.
The report will be the last main indicator of the economy's strength before the central bank begins its next meeting to decide whether to raise its key overnight rate from 0.5 percent, the lowest among industrialized nations.
Governor Toshihiko Fukui last month indicated he may be willing to raise borrowing costs even if the numbers are a bit weak.
“Fukui has said he's prepared for a moderation,” said David Cohen, director of Asia economic forecasting at Action Economics in Singapore. If GDP is consistent with the moderate growth that the BOJ has been talking about, and the financial- market turmoil cools down, I would expect them to raise rates.
Expectations of a rate increase have rebounded since waning on July 27, when a global stock-market rout raised concern among investors that a worsening U.S. housing slump would slow growth in Japan's largest export market.
Investors see a 55 percent chance the bank will raise the rate when its two-day meeting concludes Aug. 23, up from a low of 47 percent on July 27, according to calculations made by Credit Suisse Group based on the exchange of interest payments. The odds were unaffected by the defeat of Prime Minister Shinzo Abe's ruling coalition in upper house elections on July 29.
The yield on Japan's benchmark 10-year bond rose half a basis point to 1.755 percent at 12:12 p.m. in Tokyo today.
Second-quarter growth at 0.9 percent would give Japan an average expansion rate of 2.1 percent this year. That's above the bank's 1.5 percent to 2 percent estimate of potential growth, a measure of the pace of expansion the bank considers achievable if almost all of Japan's labor and capital are used.
“The bank will want to raise rates provided the second- quarter GDP data show growth remaining at or above its sustainable rate,” said Julian Jessop, chief international economist at Capital Economics in London.
Consumer spending is likely to slow, with economists forecasting 0.4 percent growth, half the pace of the first quarter.
Japan's consumers became the most pessimistic in more than two years in June, when the government rolled back tax rebates, adding about 14,000 yen ($118) to the average tax bill for a family of four. Wages fell 0.7 percent in the quarter, the second straight drop, indicating unemployment at a nine-year low of 3.7 percent has failed to spark salary increases.
“Consumer spending isn't really that impressive,” said Kiichi Murashima, an economist at Nikko Citigroup Ltd. in Tokyo. If external conditions were strong the bank may be inclined to raise rates anyway, but recent concerns over the outlook for the U.S. will make a move difficult.
Net exports, or the difference between exports and imports, probably shaved 0.1 percentage point from growth after being one of the main drivers of the expansion in the first quarter. (Source: Bloomberg