“Japan’s economy expanded the most in a year last quarter as consumer spending and export gains outweighed the weakest business investment since the wake of the March 2011 earthquake and tsunami.
Gross domestic product rose an annualized 3.5 percent, a Cabinet Office release showed inTokyo. Private consumption, making up 60 percent of GDP, contributed 2.3 percentage points to the jump. The BOJ may upgrade its assessment of the economy after a May 22 policy meeting, according to people familiar with the central bank’s discussions.
Today’s report shows while consumers — aided by a stock-market surge — are responding to the reflation campaign mounted by Prime Minister Shinzo Abe and Bank of Japan chief Haruhiko Kuroda, companies remain cautious. That may change as the yen’s 21 percent slide against the dollar in the past six months spurs profits and Abe embarks on reducing regulations hampering the world’s third-biggest economy.
“Japan is clearly back from stagnation last year,” said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo. “The key from here is whether Abe can unveil a strong growth strategy. If he succeeds, that will boost business investment to support growth.”
Abe plans next month to unveil his so-called third arrow of structural reform, following the first two arrows of monetary and fiscal stimulus.
