- Marcel Thieliant, a Japan economist at Capital Economics
The Japanese economy grew more than expected in the first quarter, supported by household and business spending, fuelling optimism the world's third biggest economy's recovery is back on track following last year's recession caused by the government's consumption-tax hike. Measured on an annualized basis, Japan's economy expanded 2.4% in the March quarter compared with the previous three-month period. In the final quarter of 2014, the economy expanded 1.5% following contraction in the preceding two quarters. On a quarterly basis, Japan's GDP grew 0.6% in the beginning of the year, compared with the market's median estimate of 0.4%.
Household spending was one of the main contributors to growth, rising 0.4% on quarter, overshooting economists' projections for the 0.2% increase. Meanwhile, capital spending climbed 0.4% on quarter, slightly weaker than a 0.6% rise expected by economists. Yet, that was the first increase on quarter in four quarters. Inventories contributed 0.5 percentage points to growth, compared with 0.2 percentage points predicted by analysts. The data also showed Japan's recovery is still largely driven by domestic demand. Exports rose 2.4% on quarter, compared with the 3.2% increase in the October-December quarter, though many economists expect a pickup in coming months.
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