The preliminary figures, issued yesterday, will be welcome news to prime minister Shinzo Abe, who has been trying to break a cycle of sluggish growth and deflation with a package of public spending and extraordinary monetary policy branded ‘Abenomics’.
Japan’s first quarter growth also marked the fastest in a year, boosted by exports and private consumption.
Growth rose by 0.5% from January to March, with the annualised rate (2.2%) exceeding expectations and outpacing that of other major economies.
However, policymakers and observers have long-argued pay rises are needed to bolster consumer demand and drive a sustained recovery.
Marcel Thieliant, analyst at Capital Economics, said that while the firm expects above-consensus growth of 1.5% for the entire year, “sluggish wage growth combined with the rebound in inflation is taking its toll on household incomes”.
“We therefore expect a slowdown in the second half of the year,” he noted.