TOKYO (Reuters) - Japan’s economy bounced back from a year-end lull in the first quarter, powering ahead of other major industrial nations thanks to rebuilding of the tsunami-battered northeast, solid private spending and some improvement in exports.
The world’s third-largest economy grew 1.0 percent in the January-March quarter, just ahead of a median market forecast of 0.9 percent, and growth in the final three months of 2011 was revised to flat from a 0.2 percent contraction, government data showed on Thursday.
The data did little to alter the dominant market view that the Bank of Japan will stay put at a policy review next week after last month’s monetary easing.
”Consumer spending and public investment are what drove the economy, with auto demand stirred by government subsidies and investment helped by extra budgets after the earthquake,“ said Yoshimasa Maruyama, chief economist at Itochu Economic Research Institute. ”
“So, with government polices behind the quarterly growth, we can’t say this is a reflection of real strength in the Japanese economy.”
The quarterly rise in gross domestic product translated into annualized growth of 4.1 percent, stronger than 3.5 percent expected by analysts.
That pace exceeds annualized growth of 2.2 percent growth in the United States in the same quarter, and also outperforms European heavyweights Germany, Britain, France and Italy.
Private consumption, which makes up about 60 percent of GDP, rose 1.1 percent, higher than an expected 0.8 percent, helped by government subsidies for buyers of fuel-efficient cars.
A weaker yen and a pick-up in overseas demand saw exports contribute 0.1 percentage point to growth in January-March, after making a 0.7 percent detraction in the previous quarter.
Economists believe growth probably peaked last quarter and expect expansion to moderate to around 2 percent in the current fiscal year ending in March 2013, with the effect of the post-tsunami rebuilding seen fading in the second half of the year.
They also say political deadlock in Greece that has rekindled investor concerns over euro zone debt and economic slowdown in China could hurt Japan’s exports, which are seen as essential element of any sustained recovery.
“Consumer spending is proving robust, but the key to sustainability for the economic recovery is whether or not exports regain strength,” said Takeshi Minami, chief economist, at Norinchukin Research Institute.
The government will consider upgrading its economic assessment in a monthly report for May, due out on Friday, the Asahi newspaper said.
Additional reporting by Tetsushi Kajimoto and Kaori Kaneko; Editing by Tomasz Janowski and John Mair