Japan’s Economy Rebounds After Recession
Japan’s economy emerged from recession and grew faster than expected in the first quarter of 2023, as a post-COVID consumption rebound offset global headwinds, shoring up hopes for a sustained recovery.
But mounting signs of a slowdown in U.S., European and Chinese growth cloud the outlook for the export-reliant economy, heightening uncertainty on how soon the central bank can phase out its massive stimulus programme.
Analysts say consumption will continue to underpin growth as removal of COVID curbs boost tourism and service spending.
However, “the economic recovery will be moderate as weak overseas demand will weigh on exports. It will be a tug-of-war between robust domestic demand and sluggish exports,” Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute said.
The world’s third-largest economy grew an annualised 1.6% in January-March, government data showed on Wednesday, far exceeding market forecasts for a 0.7% gain and marking the first rise in three quarters.
Private consumption, which makes up more than half the economy, grew 0.6% in January-March from the previous quarter, as the country’s re-opening from the pandemic boosted service spending. That beat forecasts of a 0.4% increase.
Capital expenditure also expanded by 0.9%, confounding forecasts for a 0.4% fall.