Revised figures released on Thursday, June 8, revealed that Japan’s economy expanded more than previously estimated from January through March. This was due to the fact that a post-pandemic increase in domestic spending and firm restocking partially offset the impact of sluggish global demand on exports.
An Unexpected Growth
The annualized growth rate of Japan’s gross domestic product (GDP) from January through March was 2.7%, significantly higher than the preliminary estimate of 1.6% growth and the consensus projection of 1.9% growth among experts.
Further economic expansion in the world’s third-largest economy will depend on sustained wage increases, which the Bank of Japan and the government view as crucial policy goals given that inflation is at a four-decade high.
A Steady Recovery
According to the most recent data, Japan’s economy is steadily recovering from the coronavirus outbreak. It was the second year in a row that real GDP grew, with the fiscal year that ended in March seeing a rise of 1.4% over the prior year.
After the Ministry of Finance reported last week that business spending by Japanese manufacturers was expanding at a higher rate, capital expenditure increased by 1.4% in the first quarter of 2023, up from the earlier estimate of 0.9%.
Private consumption, the backbone of domestic demand and accounting for more than half of Japan’s GDP, saw a modest decline from the previous estimate’s 0.6% to 0.5%. However, it continued to grow for the fourth straight quarter.
As per NIKKEI Asia, net exports reduced first-quarter GDP by 0.3 of a percentage point, matching the original estimate. Still, domestic demand contributed 1.0 percentage points, more than anticipated.
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