TOKYO (Reuters) - Japan’s economy rebounded in January-March from a lull in the previous quarter, shaking off the pain of a strong yen and Europe’s debt crisis on solid consumer spending and rebuilding from last year’s earthquake.
- Gross domestic product (GDP) expanded 1.0 percent in January-March from the previous quarter after a revised 0.0 percent result for October-December last year. The increase compared with a median market forecast of a 0.9 percent rise.
- On an annualized basis, GDP rose 4.1 percent, bigger than a 3.5 percent increase expected by economists.
YOSHIKI SHINKE, SENIOR ECONOMIST, DAI-ICHI LIFE RESEARCH INSTITUTE IN TOKYO
”Firm domestic demand will continue to drive the Japanese economy in April-June. I expect the economy to achieve an annualized growth rate of around 1 percent in the second quarter.
”But the outlook is highly unclear for the latter half of this year, when reconstruction demand may wane and with the chance of government subsidies for low emission (vehicles) running out of money sooner than expected.
“The economy is moving in line with the Bank of Japan’s forecast, but the bank must be watching financial markets closely as they remain jittery over Europe’s sovereign debt crisis. The timing of further monetary easing would depend more on financial market movements than on the real economy.”
YASUO YAMAMOTO, SENIOR ECONOMIST, MIZUHO RESEARCH INSTITUTE, TOKYO
”Japan’s economy will likely grow at a modest pace this year, as support from reconstruction demand is expected to continue, although consumption will probably falter as the positive effect of government subsidies for fuel-efficient cars will fade out.
“The BOJ’s forecasts for consumer prices for this fiscal year and next seem optimistic. We project that core CPI year-on-year may begin falling as early as April, given softening energy prices. So the BOJ is expected to ease policy around summer as pressure from the government is also likely to mount.”
TAKESHI MINAMI, CHIEF ECONOMIST, NORINCHUKIN RESEARCH INSTITUTE, TOKYO
”Growth was stronger than expected, helped by rebuilding from last year’s earthquake. But the positive surprise is overshadowed by renewed debt problems in Europe and the increased possibility of a prolonged slowdown in China.
”The data does not change the outlook for the economy. Consumer spending is proving robust but the key to sustainability for the economic recovery is whether or not exports regain strength.
“There is a growing chance that advanced nations will once again cooperate to contain contagion from Europe’s crisis, such as by jointly supplying money to the banking system.”
YOSHIMASA MARUYAMA, CHIEF ECONOMIST, ITOCHU ECONOMIC RESEARCH INSTITUTE, TOKYO
”Consumer spending and public investment are what drove the economy, with auto demand stirred by government subsidies and investment helped by extra budgets after the earthquake. So, with government polices behind the quarterly growth, we can’t say this is a reflection of real strength in the Japanese economy.
“Auto demand and public investment could stay relatively firm from April-June onwards, but growth in those areas will inevitably lose steam. When we think about the outlook for the Japanese economy, the key is whether exports will recover.”
- For the full tables, go to the Cabinet Office’s web site:
- Japan’s economy was weighed down in the final quarter of last year as a spike in the yen, slowing global growth and damage to supply chains from severe flooding in Thailand hit exports.
- Analysts expect the world’s third-largest economy to achieve growth of around 2 percent in the current fiscal year ending in March 2013, mainly on solid private consumption and rebuilding efforts on its quake-battered northeast coast.
- The Bank of Japan loosened monetary policy in April, the second stimulus move in just over two months, in a show of its determination to beat deflation.
Reporting by Leika Kihara, Tetsushi Kajimoto, Kaori Kaneko, Rie Ishiguro and Kiyoshi Takenaka; Editing by Edmund Klamann