Japan’s economy surged in the first three months of the year, data showed yesterday, marking the fourth straight quarter of expansion as the country’s export-driven recovery gathers pace.
GDP accelerated by an annualized 4.9 percent in the January to March period and 1.2 percent compared with the previous quarter, the fastest pace of growth since the second quarter of last year.
The rate of expansion missed forecasts, however, with a Dow Jones Newswires poll of 11 economists predicting 5.9 percent annualized growth in the period. A Nikkei poll of 26 companies put growth at 5.4 percent.
While the growth was applauded by Japanese Finance Minister Naoto Kan, who said it reflected “a steady recovery,” he warned that Japan remained mired in deflation and called on the Bank of Japan to do more to curb falling consumer prices.
“The headline figure was slightly weaker than the market had expected, but it is nonetheless high growth,” said Naoki Murakami, chief economist at Monex Securities.
Illustrating how the health of corporate Japan is trickling through to the wider economy, exports of goods and services were up 6.9 percent quarter-on-quarter, while household and private consumption gained 0.3 percent.
The data “confirms the V-shaped recovery in exports for the past year has led to a recovery in domestic demand, such as capital spending,” Murakami said.
The economy grew 1.2 percent in the first three months compared with the fourth quarter of last year, which saw revised growth of 1 percent, slightly higher than an earlier estimate of 0.9 percent.
A revised figure for July to September last year showed growth of 0.1 percent compared with an earlier estimated decline. The overall figure last year was unchanged with a 5.2 percent contraction as exports plummeted during the global economic crisis.
While the latest data shows Japan remained ahead of China as the world’s No. 2 economy in the first quarter in terms of nominal GDP, it remains close to losing the position it has held for more than 40 years.
The corporate space is also nervously eyeing the eurozone debt crisis, which has left the safe-haven yen in demand against the euro, denting the profit outlook for Japanese exporters repatriating earnings.
Takeshi Minami, economist at the Norinchukin Research Institute, said Japanese growth “will likely slow in April to June.”
“It will be difficult to expect exports to continue making this much of a contribution” to the overall economy, he said.
Separately, Singapore’s economy grew by a better-than-expected 15.5 percent year-on-year in the first quarter, spurred mainly by strong global demand for electronics, official data showed yesterday.
On a quarter-on-quarter basis, seasonally-adjusted GDP surged 38.6 percent in the three months to March, the Ministry of Trade and Industry (MTI) said.
Initial government estimates released last month showed the economy expanded an annual 13.1 percent and 32.1 percent on a quarter-on-quarter basis.
The MTI said the first quarter display was driven by the manufacturing sector’s annual 32.9 percent surge amid buoyant global demand for electronics products, especially semiconductor chips.
“The strong momentum seen in the first quarter was broad-based, led by the manufacturing sector ... The electronics cluster enjoyed the strongest growth, underpinned by strong global demand for semiconductor chips,” the MTI said.
Other key industries also showed strong performances, it said.
The MTI is maintaining its growth forecast for this year of 7 percent to 9 percent, a dramatic turnaround from last year, when GDP shrank a revised 1.3 percent.
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