The country’s cabinet office published the revision yesterday, cutting the annualised growth rate for the first quarter of 2017 from the 2.2% estimated in May to 1%.
This was largely due to private companies’ inventories of oil and other raw materials being lower than had originally estimated, as well as a drop in private consumption.
However the country still achieved its fifth consecutive quarter of growth. While this was not as high as originally suggested, and was below expectations, it was still relatively strong for a country with a stubbornly sluggish economy.
Observers said this suggested underlying growth remained strong. Marcel Thieliant, analyst at Capital Economics, said business surveys remain upbeat and early indications for the second quarter are positive.
As a result, the firm said it still predicts the country’s economy to grow by 1.5% this year.
Pointing to results from an economy survey of conditions in the country, Thieliant continued: “’Household-related activity’ has risen by 7 points over the past year and on past form is consistent with consumer spending rising by around 2% per annum.
“While we doubt growth will be quite this rapid, the strength of the survey is still a positive sign.”
Japan has been scrambling to revive its stagnating economy, led by prime minister Shinzo Abe and his stimulus plan dubbed ‘Abenomics’.
While data suggests this might finally be starting to bear fruit, commentators and policymakers argue pay rises are needed to bolster consumer demand and drive a sustained recovery.
