Japan's economy has expanded for the fifth quarter in a row — the longest growth streak in 11 years — with the annualized 2.2 percent real-term gain in the January-March gross domestic product from the previous quarter picking up speed from the 1.4 percent rise in the October-December period. But few would characterize the expansion as robust domestic demand-driven growth. Despite the record-high earnings of major businesses, consumer spending remains weak as increases in wages stagnate. Greater efforts need to be made to translate strong corporate earnings into higher domestic demand through more wage hikes and investments.
Personal consumption, which accounts for 60 percent of the GDP, grew 0.4 percent from the previous quarter. But that is deemed attributable to the dearth of negative factors that dampen consumption, such as rises in fresh food prices and unseasonably bad weather in the January-March period. While capital investments fell 0.2 percent, it was the 2.1 percent increase in exports most responsible for the continued expansion of the economy.
The Bank of Japan's tankan survey in March found that business sentiment among big manufacturing firms improved for the second quarter in a row, aided by the yen's weakness and a pickup in overseas markets. Last month, the central bank upgraded its assessment of the economy as being in a moderate "expansion" — the first use of such a description in about nine years.