TOKYO — Japan’s economy posted significant growth in the first quarter of the year, beating expectations on a surge in exports and higher consumer spending.
Japan’s preliminary first-quarter gross domestic product rose 3.5 percent on an annualized basis, the country’s Cabinet Office said Thursday. The growth provides the latest evidence that Japan Prime Minister Shinzo Abe’s fiscal policies and stimulus programs are getting the world’s third-largest economy back on track.
“The Japanese economy has clearly moved into a recovery phase after languishing from 2012 Q2,” Nomura chief economist Tomo Kinoshita wrote in a research note.
Exports rose 3.8 percent in the quarter, showing a sharp turnaround after shrinking for three consecutive quarters. A newly weakened yen likely boosted the figures. Japan’s exports took a beating in the latter part of last year, partially due to political tensions with China.
Consumer spending increased 0.9 percent, showing further improvement from the fourth quarter of last year, when it rose 0.4 percent.
“Consumer spending appears to have been supported by yen depreciation and rising stock prices amid growing expectations of the new administration’s economic policies and easing by the Bank of Japan,” said Kinoshita, predicting that Japan’s domestic demand will support economic growth later this year as Asian economies, including China, register a slowdown.
There are signs that the luxury goods market in Japan has been picking up momentum so far this year.
Last month, LVMH Moët Hennessy Louis Vuitton said that its first-quarter sales in Japan jumped 12 percent at constant exchange rates and on comparable structure terms.
Earlier this week, Salvatore Ferragamo said its sales in Japan increased 4 percent at constant exchange rates — although they fell 8 percent in real terms on yen weakness.
J.P. Morgan’s luxury goods team interpreted the Ferragamo numbers positively and said they represent a broader trend.
“Japan showed some signs of a pick-up with the Japanese consumer spending more domestically, owing to the weak yen, a theme observed also by the rest of the peers in this Q1 reporting season,” they wrote in a note this week.
Tod’s, which also released first-quarter numbers this week, did not break out Japan sales. But according to J.P. Morgan, Tod’s management said like-for-like sales in Japan grew at a double-digit rate.