The Japanese economy grew 1.0 percent in the January-March quarter from the preceding quarter, or at an annualized pace of 4.1 percent, in real terms, the Cabinet Office said in a preliminary report on Thursday.
It was the third consecutive quarterly expansion as growth in the October-December period was also revised from negative to positive as a result of seasonal adjustment, albeit to an anemic annualized pace of 0.1 percent.
The pace of growth in the first quarter of this year was faster than most analysts had expected.
The Cabinet Office attributed the relatively strong growth in gross domestic product (GDP), the total output of goods and services in a nation, in the January-March quarter, primarily to firm consumer spending and brisk public investment.
Consumer spending, which accounts for nearly 60 percent of Japan’s GDP, rose 1.1 percent in the January-March quarter on a quarter-on-quarter basis, led by brisk auto sales thanks to government subsidies for environment-friendly vehicles, which were reintroduced at the end of last year.
Public investment surged 5.4 percent on a quarter-on-quarter basis due to full-blown demand related to reconstruction efforts from the devastating earthquake and tsunami that hit northeastern Japan in March 2011.
But corporate capital investment and housing investment sank 3.9 percent and 1.6 percent, respectively, on a quarter-on-quarter basis.
Exports made a significant recovery in the January-March period, growing 2.9 percent on a quarter-on-quarter basis, after declining 3.7% in the October-December period due largely to heavy floods in Thailand.
It remains to be seen, however, whether exports will continue to grow smoothly amid renewed concerns about the European debt crisis and a stronger yen, which makes Japanese products more expensive in overseas markets.
Japan is now the world’s third-largest economy after the United States and China and is heavily dependent on exports for growth.
In nominal terms, or before adjustment for price change, the Japanese economy also expanded 1.0 percent in the January-March period on a quarter-on-quarter basis, or at an annualized pace of 4.1 percent.
Many analysts now expect the Japanese economy to continue to grow in the April-June quarter. Economic and Fiscal Policy Minister Motohisa Furukawa also sounded a bullish tone on the future direction of the Japanese economy. “The Japanese economy is expected to keep growing at a moderate pace,” he said at a press conference on Thursday.
Contact Hisane Masaki at firstname.lastname@example.org.