(Bloomberg) -- Japan’s economy indeed hit a speed bump during the first quarter, as a worse reading of private consumption offset an upward revision to business investment, revised data showed Friday. The result for gross domestic product missed forecasts.
Key Takeaways
Japan’s economy is forecast to have resumed growing in the second quarter, but consumer spending remains a drag. The downward revision to first-quarter private consumption was the result of an upward revision to the figures for the previous quarter, economy minister Toshimitsu Motegi said Friday. Yet weaker-than-expected household spending in April suggests the economy will continue to rely primarily on external demand, at a time when escalating trade battles pose risks for exports.
Economist Views
- "Capital expenditure has improved from the preliminary numbers, but it’s still weak, and points to a soft patch in the economy," said Hiroaki Muto, chief economist at Tokai Tokyo Research Center. "Consumption is even weaker, and the April numbers show that the situation hasn’t improved."
- "In principle Japan is an export-driven economy, but domestic demand isn’t following through," Muto said. "The problem is that disposable income isn’t rising."
- "I do expect Japan’s recovery will continue but it’s not very robust yet," said Norio Miyagawa, a senior economist at Mizuho Securities Co. "It’s weak enough to fall into negative territory due to bad weather."
- The Bank of Japan will stick to its view that the soft patch is temporary and growth should pick up, but the growth isn’t adding much momentum to inflation, Miyagawa said. "Two-percent inflation remains a very high hurdle for the BOJ."
In Detail
- Measured quarter on quarter, GDP contracted 0.2 percent (estimate -0.1%), compared with a preliminary reading of -0.2 percent.
- A separate data release showed Japan’s current account surplus was 1.8 trillion yen ($16.4 billion) in April.
(Adds details, economists’ quotes.)
