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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