TOKYO- Japan’s economy grew more than initially thought in January-March, revised data showed on Thursday, as a post-pandemic pickup in domestic spending and company restocking helped offset the hit to exports from slowing global demand.
With inflation running at a four-decade high, further growth in the world’s third-largest economy will depend on sustained wage hikes, which the Bank of Japan and the government regard as core policy objectives.
Japan’s gross domestic product (GDP) expanded an annualized 2.7 percent in January-March, much higher than a preliminary estimate of a 1.6 percent growth and much higher than economists’ median forecast for a 1.9 percent rise.
“Despite the global economic slowdown, the Japanese economy remains resilient – ample private consumption will continue to support the growth,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
However, with much of the revised January-March growth driven by inventories, rather than final demand, Tsunoda warned the recovery so far may not be as robust as headline figures suggest.
The figures also revised out a technical recession reported for the second half of last year, defined as two consecutive quarters of contraction. The revised data showed GDP rose 0.4 percent in October-December, following a 1.5 percent contraction in July-September.
The January-March expansion translates to a 0.7 percent quarter-on-quarter rise, data released by the Cabinet Office showed, against a preliminary reading of 0.4 percent and economists’ forecast for a 0.5 percent increase.
Companies’ work-in-progress inventories, particularly among automakers and semiconductor equipment firms, and capital expenditure rose faster than previously reported, contributing to the upward GDP revision, a government official told a press briefing.
Capital spending rose 1.4 percent, upgraded from 0.9 percent and roughly in line with Ministry of Finance data last week that showed manufacturers’ business spending grew at the fastest rate since 2015.
