Japanese Growth Beats Forecasts

Japan’s economy grew at the fastest pace in nearly three years in the first quarter due to increased spending ahead of a sales tax increase on 1 April.

Official data showed GDP rose 1.5% in the January-to-March period, against a revised 0.1% in the prior quarter.

The figure beat forecasts for 1% growth, and was led by consumer spending which rose by 2.1%.

Capital spending by businesses also outperformed, rising by 4.9%, which was more than double analyst expectations.

Private consumption accounts for about 60% of Japan’s economy. However, economists warned that spending may taper off now that the April tax hike has been introduced.

“Japan’s economy expanded rapidly ahead of the sales tax hike, but is set to slump thereafter,” Marcel Thieliant, Japan economist at Capital Economics, said.

“Looking ahead, the economy will certainly contract in the second quarter of the year, as consumers rein in spending after the tax hike, and residential investment is set to plunge.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza