Japan’s economy grew an at annual rate of 4.1 percent in the first quarter amid a gradual recovery from last year’s catastrophic earthquake and tsunami.
The Cabinet Office said yesterday that the preliminary growth figures showed that a rebound in consumer spending was lifting the world’s third-biggest economy.
The latest data showed that private consumption grew at an annual rate of 4.4 percent. Consumer spending makes up more than half of Japan’s economy.
Also robust was public investment at 23.6 percent, reflecting reconstruction spending on housing and other building work in the devastated northeastern region.
Japan’s economy grew 1 percent in the quarter ended March from the October-December quarter last year. That was better than the 0.7 percent projected by analysts in Japan, and translates to a 4.1 percent expansion in annualized terms.
The latest growth marks a third straight quarter of growth, although still at fragile rates. The economy was virtually flat October-December, but did not shrink.
Corporate spending was weak during the January-March period, shrinking 3.9 percent from the previous quarter, or an annualized rate of 14.8 percent.
Prospects remained uncertain for the current quarter because of fears about the European economy and other factors that could crimp expansion, said Satoshi Osanai, an economist at the Daiwa Institute of Research in Tokyo.
“Economic growth is likely to slow down and could head into a contraction,” Osanai said.
Meanwhile, Singapore yesterday stuck to its economic growth projections of 1-3 percent for this year, but warned there was a chance of a “disorderly sovereign debt default” in the eurozone that could hit exports.
The Ministry of Trade and Industry also said weakness in the US economy was another concern for Asia’s export-dependent nations including Singapore.
Its comments came as it revealed the economy grew 10 percent in the January-March first quarter from the previous three months thanks to a surge in manufacturing.
“A disorderly sovereign debt default in the eurozone cannot be ruled out at this stage,” the ministry said. “If it materializes, there will be considerable downsides for the global economy and Singapore’s externally oriented industries.”
The ministry said that even a rise in Asian consumer spending would not be sufficient to cushion the impact of weaker demand in the key export markets of the US and Europe.
Singapore’s GDP grew an annual 1.6 percent in the first quarter ended March and 10 percent on a quarter-on-quarter basis.
The impressive expansion was driven by the manufacturing sector, which grew 19.8 percent on a quarterly basis, a huge turnaround from the 11.1 percent decline posted from October to December.
“This turnaround was driven by increased production across all key manufacturing clusters, notably electronics and precision engineering,” the ministry said.
In a separate report, the trade promotion agency, International Enterprise Singapore (IE Singapore), said exports were up an annual 6.1 percent in the first quarter, reversing a 2.7 percent fall in the final three months of last year.
However, IE Singapore said it was also keeping this year’s growth forecast for non-oil domestic exports and total trade at between 3 and 5 percent because “uncertainties remain in the eurozone.”