Japan’s Q1 growth revised up
Current account surplus jumps six-fold in April
TOKYO: Japan posted stronger-thanexpected growth in the first quarter as a pick-up in capital spending powered the world’s number three economy, but some economists warned that the recovery could be short-lived.
The 1% expansion in January-March — or 3.9% on an annualised basis — was sharply up from an initial estimate of 0.6% 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 labour 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 yesterday’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% from the previous quarter, well above an initial 0.4% 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, BoJ chief Haruhiko Kuroda has been forced to push back a timeline for hitting a 2.0% inflation target — a cornerstone of Prime Minister Shinzo Abe’s plan to kickstart the deflation-plagued economy — although he insists that healthy price rises are around the corner.
In Asian forex trading, the dollar was slightly lower at 125.44 yen, against 125.56 yen on Friday in New York where the US currency climbed briefly to a 13-year high of 125.86 yen.
The data contrasted with revised US figures that showed the world’s top economy contracted an annualised 0.7% in the first three months of the year, with the impact of a ports slowdown and cautious consumer spending worse than originally estimated.
The US is a major market for Japanese exporters and despite the apparent strength of yesterday’s figures, they also raised a red flag as firms’ inventories grew from three months earlier.
“This (inventory build-up) implies that the underlying pace of demand was not nearly as strong as the headline suggests,” Marcel Thieliant from Capital Economics said, adding that consumer spending and industrial output remained lacklustre. “We... expect a sharp slowdown in GDP growth in the second quarter.”
Separate data yesterday showed Japan’s current-account surplus made a six-fold jump to 1.32 trillion yen ($10.5 billion) in April, thanks to an improving trade picture and buoyant returns on company investments.
The figures mark Japan’s broadest measure of trade with the rest of the world, including both goods and services, tourism and returns on foreign investment.