The economy grew an annualized rate of 2.4 percent in the first three months of 2015, the government said Wednesday, indicating it is on track for a moderate recovery after the jolt delivered by last year’s consumption tax hike.
The stronger-than-expected figure pushed the Nikkei 225 stock average to a fresh 15-year high on Wednesday, closing up 170.18 points, or 0.85 percent, from Tuesday at 20,196.56, the highest close since April 2000.
Between January and March gross domestic product grew 0.6 percent on the previous quarter, the second straight quarter of growth and stronger than the market forecast, according to a preliminary report by the Cabinet Office.
But the data also show that the recovery in consumer spending, which accounts for around 60 percent of GDP, remained slow, increasing only 0.4 percent following an identical gain in the previous quarter.
Sales of home electronics, such as refrigerators and televisions, helped lift consumption, but a number of other consumer-related figures such as household spending and supermarket sales remained tepid.
Meanwhile, corporate capital spending, seen by the government as key to shoring up the economy, gained 0.4 percent, marking the first rise in four quarters. However, the growth was small compared with robust earnings registered by domestic companies.
“The (negative) effects of the consumption tax hike were bigger than expected,” economic and fiscal policy minister Akira Amari told a news conference.
Amari added that capital spending “still shows some weakness,” calling on companies to make active investments to achieve further economic recovery and restore the nation’s fiscal health.
Reflecting the fading impact of the 3-percentage-point sales tax hike to 8 percent in April last year, housing investment rose 1.8 percent for the first increase in four quarters, following a 0.6 percent decrease in the October-December period.
Exports increased 2.4 percent on the back of a recovery in the global economy, as well as purchases of goods by foreign tourists visiting Japan, while imports rose 2.9 percent.
Despite the bigger-than-expected growth in GDP, some economists are not upbeat about the outcome, as the figure was lifted mainly by an increase in private-sector inventories, which may suggest weak demand for products.
“The data showed that goods were not selling much,” said Junichi Makino, chief economist at SMBC Nikko Securities Inc. “Demand was not so strong and the outcome proved disappointing.”
Despite the rise in exports, Makino was cautious about the prospects for further gains, noting demand for automobiles in the United States is losing momentum and the Chinese economy is slowing.
But Makino expects domestic consumption to recover because consumer prices are likely to start declining due to lower oil prices, prompting the country to stage a domestic demand-led economic recovery.
“Though external demand is expected to worsen, consumption is likely to become the driver for growth this year,” he said.
In nominal terms, or unadjusted for price changes, the world’s third-largest economy expanded 1.9 percent quarter-on-quarter.
In fiscal 2014, GDP fell a real 1.0 percent, down for the first time in five years. It last contracted in fiscal 2009 due to the global financial crisis of 2008.