The economy grew much faster than estimated in the first quarter, bolstering views that Japan is recovering from the first stage of the consumption tax hike last year that caused a brief recession, the government said Monday.
In a revision, the Cabinet Office said gross domestic product grew at a real annualized rate of 3.9 percent in the January-March quarter, bounding over the 2.4 percent rate listed in its preliminary report on May 20.
The change in inflation-adjusted GDP corresponds to an increase of 1.0 percent from the previous quarter, rather than 0.6 percent as initially reported, it said.
It’s the second consecutive quarter of expansion for the economy following a contraction in the six months to last September caused by the April 2014 consumption tax hike to 8 percent from 5 percent. The dip raised doubts about Prime Minister Shinzo Abe’s three-pronged economic policy, dubbed “Abenomics.”
A government official credited the latest upgrade in GDP — the total value of goods and services produced in a country — to strong corporate capital spending, which the government views as key to shoring up the economy.
Business investment rose 2.7 percent due mainly to increased spending in the retail, electronics and service sectors, compared with 0.4 percent in the preliminary report.
But private consumption, which accounts for around 60 percent of GDP, rose only 0.4 percent, unchanged from the initial data, a reminder that households are still wary about spending money amid weak wage growth.
Despite the generally upbeat revision, economists were largely cautious about the outlook for the second quarter in light of weak consumption.
For the whole of fiscal 2014 ended in March, GDP fell a real 0.9 percent to log the first decline in five years, after being upgraded slightly from a preliminary contraction of 1 percent.
Koya Miyamae, senior economist at SMBC Nikko Securities Inc., said consumption and exports turned out to be weak in April and could weigh on the recovery down the road.
“The economy could fall into negative growth in April-June,” he said.
The average projection of 41 private-sector economists that was released last week by the Japan Center for Economic Research said GDP growth is expected to slow to an annualized real rate of 1.7 percent in the three months through June.
Housing investment climbed 1.7 percent, revised slightly downward from a 1.8 percent.
Exports gained 2.4 percent and imports grew 2.9 percent, both unchanged.
In nominal terms, or unadjusted for price changes, GDP jumped an annualized real 9.4 percent, the fastest pace since the second quarter of 1990.