Ja­pan’s re­vised Q1 growth blows past ex­pec­ta­tions


Ja­pan posted stronger- thanex­pected growth in the first quar­ter as a pickup in cap­i­tal spend­ing pow­ered the world’s num­ber three econ­omy, but some econ­o­mists warned that the re­cov­ery could be short-lived.

The 1.0 per­cent ex­pan­sion in Jan­uary-March — or 3.9 per­cent on an an­nu­al­ized ba­sis — was sharply up from an ini­tial es­ti­mate of 0.6 per­cent growth, ac­cord­ing to the Cabi­net Of­fice fig­ures.

The up­beat data is good news for Tokyo’s ef­forts to boost the econ­omy, but house­hold spend­ing re­mains stub­bornly weak as the Bank of Ja­pan strug­gles to push up prices in a bid to end decades of de­fla­tion.

De­spite wage rises at big firms and a tighter la­bor mar­ket, con­vinc­ing peo­ple to splash out on con­sumer goods has been a strug­gle af­ter Ja­pan raised sales taxes last year to help pay down a huge na­tional debt.

The rise ham­mered con­sumer spend­ing and pushed the econ­omy into a brief re­ces­sion. Ja­pan limped out of the red in the last three months of 2014 with Mon­day’s sur­prise fig­ures of­fer­ing some hope for bet­ter times ahead.

“The fig­ures show the Ja­panese econ­omy is grad­u­ally head­ing for re­cov­ery,” said Credit Suisse econ­o­mist Takeshi Saito.

Cor­po­rate in­vest­ment rose 2.7 per­cent from the pre­vi­ous quar­ter, well above an ini­tial 0.4 per­cent ex­pan­sion.

The growth fig­ures were in line with the Bank of Ja­pan’s as­sess­ment that the econ­omy was on the up­swing, and may de­lay any fur­ther cen­tral bank stim­u­lus.

“At the mo­ment, (the Bank of Ja­pan) is less likely to in­tro­duce an­other round of mon­e­tary eas­ing,” Saito said.

How­ever, bank chief Haruhiko Kuroda has been forced to push back a timeline for hit­ting a 2.0 per­cent in­fla­tion tar­get — a cor­ner­stone of Prime Min­is­ter Shinzo Abe’s plan to kick-start the de­fla­tion-plagued econ­omy — although he in­sists that healthy price rises are around the cor­ner.

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