Japan first quarter GDP revised down in fragile export-led expansion

TOKYO: Japan’s economic growth in the January-March period was severely revised down from the original estimate because of a downward adjustment in business inventories, the Cabinet Office said, underscoring the fragility of its export-led expansion.

Japan’s economy, the world’s third largest, expanded at an annualised rate of 1% in the January-March period, less than half the preliminary estimate of 2.2%, Cabinet Office data showed yesterday.

The revised gross domestic product (GDP) data compared with the median forecast of a 2.4% expansion in a Reuters’ poll of economists.

The Cabinet Office data follows a recent run of indicators that suggests continued economic growth in the current quarter because of solid exports and factory output, although wage growth and household spending remain lacklustre, despite a tight job market.

The weaker-than-expected GDP data will likely worry the Bank of Japan (BOJ), which is expected to stand pat at its next rate review on June 15-16. A majority of the economists projected in a Reuters poll last month the BOJ’s next move would be pulling back its stimulus.

Analysts say that to sustain economic growth, the export-led recovery must spread to domestic demand especially given the risk of potential slowdown in overseas economies, particularly the US economy, which some see in a late stage of expansion. – Reuters