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Japanese Economy Grew 0.60 Per Cent in Q1

Japanese Economy Grew 0.60 Per Cent in Q1
May 20, 2015

One day after the Nikkei 225 closed above the 20,000 point mark, data released on Wednesday showed that the Japanese economy grew at 0.60 per cent in the first three months of 2015. At an annualised pace, the economy grew at 2.40 per cent. The GDP data beat the 0.40 on-quarter and 1.60 annualised growth rate that the market had projected. Last quarter, the Japanese economy jumped out of a recession but still below market expectations at an annualised pace of 2.20 per cent.

Although consumer spending was weak, signs of strength were found in capital spending and the housing market. Capital investment rose by 0.40 per cent. There was a jump in inventories that added 0.50 per cent to non-annualised growth in the first quarter. However, Yoshiki Shinke of Dai-ichi Life Research Institute said the rise in inventories was not necessarily a positive indicator. Mr. Shinke noted that without a bigger rise in consumption, the rise in unsold stock by companies was a bad sign for consumer spending and retail.

Another factor for the strength in the export-driven Japanese economy was the weakened Japanese yen. Since Prime Minister Shinzo Abe came to power in December 2012, the yen has fallen about 30 per cent. On Wednesday morning, the yen has fallen about 0.20 per cent. Prime Minister Abe’s economic plan, dubbed “Abenomics”, has sought to continually push inflation to combat the deflationary threats in Japan. However, the Japanese haven’t shaken their deflationary mindset, said Economy Minister Akira Amari. Despite the GDP growth, when measuring nominal levels of GDP, the Japanese economy remains below its 1997 peak.

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