TOKYO — Japan’s economy registered better-than-expected growth in the first quarter of the year, showing newfound momentum ahead of a sales tax hike that went into effect last month.
The country’s gross domestic product grew an annualized 5.9 percent for the January to March quarter. As reported, Japanese consumers rushed to make purchases before the sales rate increased last month to 8 percent from 5 percent. Illustrating that phenomenon, private consumption for the quarter grew 2.1 percent.
Japanese department stores reported declining comps for April as consumers cut back on spending with the tax increase kicking into effect.
Nomura economist Tomo Kinoshita voiced a positive view on the GDP figures and the outlook for the Japanese economy.
“We see rush demand having held within expected limits and evidence thus far that consumer spending since April has also held firm in line with expectations as pointing to diminished risk of a sharp drop in the rate of growth in Q2,” Kinoshita said in a research note. “We think the Japanese economy is gradually overcoming the biggest challenge facing it this year, the consumption tax hike, considering also that companies started to step up capex even without waiting for the tax hike.”