Japan's economy grows by 2.7% YoY in Q1; forecast to grow at 1.3%

09 Jun '23

2 min read

Pic: Shutterstock

Insights

Japan's economy grew by 2.7 per cent year on year in the first quarter this year—much faster than previously reported—and is forecast to grow at a much slower pace of 1.3 per cent.
There is evidence of a recovery in domestic demand, while exports declined by 4.2 per cent during the quarter.
Big firms have agreed to raise pay keeping in view rising inflation.

Japan's economy grew by 2.7 per cent year on year (YoY) in the first quarter (Q1) this year, much faster than previously reported 1.6 per cent, government data showed. Spending by companies has witnessed an upward revision, offering evidence of a recovery in domestic demand, the cabinet office said.

The country’s gross domestic product (GDP) expanded by 0.7 per cent in Q1 from the previous quarter, revised up from growth of 0.4 per cent reported last month. Nominal GDP grew an annualised 8.3 per cent, up from 7.1 per cent during the quarter.

Overall exports, however, declined by 4.2 per cent during Q1—unchanged from the preliminary report.

The country’s economy is forecast to grow at a much slower pace of 1.3 per cent.

Companies have been raising investments that had been postponed during the pandemic, while private consumption is resilient despite rising prices for everyday goods, a news agency reported.

Private consumption, which accounts for more than half of the economy, was revised slightly downward to growth of 0.5 per cent from 0.6 per cent.

Big companies have agreed to raise pay keeping in view rising inflation, but the sustainability of wage growth is seen as critical to supporting domestic demand.

Public investment was revised down to an increase of 1.5 per cent from 2.4 per cent.

A fall in overseas demand is not a good sign for Japan, which relies on exports, raising the question how much longer the recent recovery in domestic demand will continue.

Fibre2Fashion News Desk (DS)

More Textiles News - Japan...