Japan’s GDP Revised Higher But Questions Remain on Sustainability

Japan’s gross domestic product (GDP) growth was revised sharply higher in the first quarter, data on Monday showed, however doubts remain over whether the momentum can be sustained.

GDP rose an annualized 3.9 percent in the first quarter, higher than the preliminary reading of a 2.4 percent increase, and up from 1.5 percent in the October-December period.

On a quarter-on-quarter basis, the economy grew 1 percent, higher than the initial reading of 0.6 percent, and up from 0.4 percent in the previous three months.

The upward revision mostly reflects better-than-expected capital spending, which rose 2.7 percent on quarter, far higher than the 0.4 percent preliminary estimate.

“Overall, the GDP report was quite solid – you’re looking at strength in capital expenditure, private consumption and residential investment. These are positive signs that the recovery is on track,” said Izumi Devalier, Japan economist at HSBC.

Japanese stocks showed only a muted reaction, with the benchmark Nikkei 225 up 0.3 percent in early trade. The yen, meanwhile, slipped 0.1 percent against the dollar.
The data follows supportive comments over the weekend from government spokesman Yasuhisa Kawamura, who said the economy was “returning to a growth orbit” on the sidelines of the Group of Seven (G7) summit.

via CNBC

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 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