Japan’s economy grew faster than first thought between January and March, official data showed yesterday, but analysts warned of a slowdown caused by a strong yen, Europe’s debt woes and weakness in China.
The Cabinet Office said GDP grew by a revised 1.2 percent in the first quarter from the previous three months, up from a preliminary figure of 1 percent expansion.
On an annualized basis, the revised figure was 4.7 percent in the quarter, higher than a preliminary 4.1 percent rise, according to the data.
The figures are good news for an economy pounded by last year’s quake-tsunami disaster, reflecting an upward trend with domestic demand and auto exports on the rise.
However, the recovery has been largely driven by government reconstruction spending and analysts said weak demand in Europe and worries about growth in China could have an impact down the line.
That point was underscored by a finance ministry official yesterday who warned that strong yen and the financial crisis in Europe were serious threats to Japan’s export-oriented economy.
“As far as the short-term outlook for the export sector is concerned, the state of European economies and foreign exchange are sources of concern,” the official said.
Data released yesterday showed Japan’s April current account tumbled 21.2 percent on-year to a surplus of ￥333.8 billion (US$4.2 billion), well below economists expectations for a ￥455.6 billion surplus.
However, the measure remained in positive territory by a wide margin, aided by Japanese investment abroad and higher auto exports despite the nation’s soaring post-tsunami fuel costs.
“The latest data confirms that the current account surplus is on a gradually declining trend, even though the fall isn’t so precipitous as to make us worry about a fall into the red this year or next,” said Junko Nishioka, chief economist at RBS Securities Japan.
As Japanese companies shift production overseas due to the relatively strong yen, income has become a key factor in Japan’s current account surplus.