Japan's latest GDP figures were released on Wednesday and were better than market expectations.
Kanda Keiji, Senior Economist of Daiwa Institute of Research, says we are seeing a rebound from a pandemic-induced consumption slump.
"Household savings have increased significantly since the beginning of the pandemic," he says. "The current consumption is partly using those increased savings. So even though prices are rising, people are spending. I think this will continue to underpin a recovery of consumption, and higher wages will help."
Kanda says the stable consumption and the Bank of Japan's monetary policy mean the risks for the Japanese economy are relatively small.
"Concerns about financial instability are growing in the US, and the impact of monetary tightening could materialize, which could trigger a recession," he says. "The question is how deep it would be, and if it happens, how much impact it would have on the Japanese economy."
Kanda says if Japanese exporters are affected, it would eventually hit household income here.