World Economy

Japan’s Q1 Growth Upgraded

Japan’s Q1 Growth Upgraded
Japan’s Q1 Growth Upgraded

The Japanese government said Wednesday that the economy expanded an annualized 1.9% in the first quarter of this year on an inflation-adjusted basis, up from a preliminary report issued last month, owing to private consumption and business investment declining less than initially thought.

The expansion in real gross domestic product translates to a 0.5% increase from the previous quarter, the cabinet office said on Wednesday, Xinhua reported.

It came in ahead of a preliminary reading of 1.7% released on May 18, as private consumption, business spending and the effects of the leap year contributed to the upward revision.

The upwardly revised data may provide some momentary relief to Prime Minister Shinzo Abe who is under fire for the ineffectiveness of his “Abenomics” economic policy mix and for reneging on a consumption tax hike plan, which he has postponed for two and a half years, due to the likelihood a hike as per schedule would batter domestic demand, further zap consumption and wages and usher in yet another recession for the world’s third-largest economy.

The revised data showed that corporate capital spending, a vital economic driver, declined 0.7% compared to a preliminary 1.4% fall, while consumer spending, which accounts for around 60% of Japan’s GDP, was upgraded to a 0.6% increase, marginally higher than a preliminary 0.5% rise.

In the first quarter, exports remained flat in the revised data at a 0.6% increase, while imports were revised upwards from a 0.4% decline, from a preliminary 0.5% drop.

Private housing investment came in at 0.7% in the recording quarter, compared to 0.8%, while public investment was down 0.7%, revised downward from a preliminary growth of 0.3%.

On quarter-to-quarter basis and in nominal terms, Japan’s economy increased 0.6% from a preliminary increase of 0.5%.

But despite the upward revision, economists remained skeptical about the future course of Japan’s economy, among downside pressures from the yen’s appreciation, falling overseas demand, choked domestic consumption and household spending and circumspect business spending, amid a backdrop of stagnant wage increases, as Abe’s blueprint for fiscal rehabilitation still, at best, remains murky.

“Even with the GDP revision, there’s no change to the picture that Japan’s economy has plateaued and has no clear driver to boost momentum in the months ahead,” Koya Miyamae, an economist at SMBC Nikko Securities in Tokyo, was quoted as saying. “The effect of the extra day from the leap year may have magnified first-quarter growth by about 0.9 percentage points on an annualized basis,” he said.