The economy expanded a real 0.8 percent in the April-June period from the previous quarter for the third straight quarterly growth, revised upward from a 0.3 percent increase in the initial report, the government said Monday.
The growth in gross domestic product translates into an annualized expansion of 3.3 percent, compared with the earlier-reported 1.1 percent annualized rise, the Cabinet Office said.
The rates exceeded the average forecast by private-sector economists of 0.5 percent quarterly growth, or an annualized 1.5 percent.
Strong growth in capital investment and a rise in inventories were the main factors behind the upward revision, an official at the Cabinet Office said.
The revised data follow a government announcement last month that the economy has emerged from a soft patch stemming from inventory adjustments in the information technology sector.
“With firm growth in personal spending and investment, we hold to our view that the Japanese economy is spearheaded by domestic demand,” the official said.
Personal spending was revised downward to 0.6 percent.
He said the growth in inventories is not a serious problem, as inventories have recently tended to swing quarter by quarter and progress has been made in inventory adjustments in the IT-related sectors.
A rise in inventories pushes up GDP, though mounting inventories are usually taken as a negative sign in economic growth.
Many analysts were surprised at, but welcomed, the larger-than-expected economic expansion in the April-June period.
“Although the disaster of Hurricane Katrina in the United States and the spike in crude oil prices may temporarily hit the Japanese economy in the July-September period, it will probably grow back in the October-December quarter,” said Takehiro Sato, an economist and executive director at Morgan Stanley Japan Ltd.
With the steady growth in the April-June period, the economy could grow a real 3.0 percent in fiscal 2005, he said.
On a nominal basis, GDP rose 0.4 percent, or an annualized 1.7 percent, in the second quarter of the year, compared with a 0.01 percent increase, or an annualized 0.03 percent rise, in the preliminary report.
In the April-June quarter, capital investment jumped a real 3.6 percent, revised upward from 2.2 percent in the initial report.
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