GDP grew an annualized 6.7% in the Q1, the Cabinet Office said in Tokyo today, faster than a preliminary 5.9 percent and the median forecast of 5.6 percent by economists in a Bloomberg News survey. The nation’s current account surplus narrowed in April from a year earlier, separate data showed.
Increasing strength in business investment would help the economy rebound from a forecast contraction this quarter after a sales tax increase in April. A rebound in consumer confidence last month signals Prime Minister Shinzo Abe may be able to sustain the recovery’s momentum to weather a planned further rise in the levy.
“Expectations for fiscal and monetary stimulus this year are fading,” said Izumi Devalier, a Japan economist at HSBC Holdings Plc. “The slowdown in the second quarter doesn’t look catastrophic, and the question now is how fast the pick up will be after then.”
Business investment rose 7.6 percent from the previous quarter, revised up from a preliminary 4.9 percent increase.
Consumer spending climbed 2.2 percent, more than an initial estimate of a 2.1 percent gain. Separate data today show consumer confidence rose in May for the first time in six months.
Sales Tax
Consumer confidence rose to 39.3 in May, the highest since January, according to separate data today. Expectations for two-to-three months in the future among workers such as taxi drivers, supermarket managers and restaurant workers rose to the highest level since December, after jumping last month by the most since the survey began in 2000, a different poll today showed.
Economic Contraction
The economy will contract 3.5 percent in the April-June period before expanding 2 percent next quarter, according to a separate Bloomberg News survey conducted prior to today’s release.Prime Minister Shinzo Abe will base a decision on raising the sales tax to 10 percent from 8 percent on July-September data.
Bloomberg
