Japan’s economy clocked its fastest pace of growth in more than two years in the first quarter as consumer spending jumped and business investment turned surprisingly strong in a sign of confidence in the prospects for future growth.
The upturn in capital spending – long a weak spot in Japan – could raise hopes the economy will have enough momentum to tide over an expected slump following an April 1 sales tax hike, easing pressure on the Bank of Japan for further stimulus to support growth.
Still, analysts also say the economy faces the risks in coming quarters of consumer demand not bouncing back convincingly after the sales tax increase and exports staying weak.
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