TOKYO (AP) — Japan’s economy grew at an annualized rate of 1.6% in the quarter through March as private demand recovered after COVID-19-related restrictions were easedaccording to data released Wednesday.
Real gross domestic product, which measures the sum value of a country’s products and services, grew 0.4% quarter-on-quarter in January-March in the world’s third-largest economy, the Government Cabinet Office said. .
That was the strongest GDP growth rate since April-June 2022, an increase of 1.1%. It also beat the market consensus forecast of 0.2%.
The year-over-year pace shows what the growth would have been if what was marked during the quarter had lasted a year.
The largest contribution to growth came from private demand, which grew at an annual rate of 3.1%, with consumer spending and private investment showing a healthy recovery. The recent opening of borders to tourists and other inbound travel has also helped brighten consumption. Public demand grew at an annual rate of 1.8%.
“The Japanese economy appears to be gradually recovering despite weak global demand,” said Robert Carnell, regional head of Asia-Pacific research at ING.
Some analysts think such signs of recovery will prompt the Bank of Japan to take action on a policy change and move towards higher interest rates. The Bank of Japan’s policy council will meet next month.
On the negative side, slowing exports held back growth, due to lagging global economies. Japanese exports from January to March fell 15.6% year-on-year.
While much of the world, including the United States and Europe, has been targeting inflationary pressuresJapan is more cautious about its approach to inflation because for decades it has been hit by the opposite problem: deflation, when prices spiral downward.
Electricity bills have recently increased across the country. While that won’t directly affect core inflation, the move is likely to have a trickle-down effect to boost inflation, analysts say.
The relatively positive reading on Japan’s economy may even help bolster Prime Minister Fumio Kishida’s position with the public, which has had its ups and downs. There is speculation that Kishida will hold snap parliamentary elections later this year.
Kishida’s ruling Liberal Democratic Party has ruled Japan almost continuously since the end of World War II. In recent years it has faced few serious challenges due to a fragmented opposition.
Yuri Kageyama is on Twitter: https://twitter.com/yurikageyama