By Stanley White
TOKYO (Reuters) – Japan’s economy grew faster than initially estimated in the first quarter as capital spending fell less than was first reported, but worries remain over slow consumer spending and weak exports.
“The upward revision is very slight, and when you exclude the impact of leap year growth is not that strong,” said Shuji Tonouchi, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
“We expect growth to slow in the current quarter. The government should focus on steps to help low-income earners, but consumption may not rise much if consumer sentiment worsens.”
Further gains in the yen could lower export profits and discourage companies from increasing investment and wages.
Prime Minister Shinzo Abe said he will announce additional economic measures this autumn, but economists worry his piecemeal approach to policy means that not enough money will be allocated to reversing population decline and speeding up growth.
Japan’s economy expanded at an annualized 1.9 percent rate in the first quarter of this year, revised up from a preliminary reading of 1.7 percent growth, the Cabinet Office data showed.
The revised January-March GDP matched the median estimate in a Reuters poll of economists.
Compared to the previous quarter, GDP rose 0.5 percent, which was more than the preliminary reading of 0.4 percent growth and the same as the median estimate.
Excluding the impact of leap year, which added an extra day to February, GDP probably expanded around 0.2 percent, Tonouchi said.
Capital expenditure, a major component of GDP, fell 0.7 percent, less than a preliminary decline of 1.4 percent. That compared with the median estimate for a 0.3 percent decline.
Private consumption rose 0.6 percent, slightly above the preliminary 0.5 percent increase recorded.
Abe announced last week a widely expected two-and-a-half year delay in hiking sales tax because of weak consumer spending, although economists worry that postponement signals the government is losing control of fiscal discipline.
(Reporting by Stanley White; Editing by Eric Meijer)