Japan Revises Growth to Annual 4.1% in Boost for Abenomics
By Keiko Ujikane - Jun 10, 2013 9:32 AM GMT+0800
Japan’s economy grew more than the government initially estimated in the first quarter, helping Prime Minister Shinzo Abe to sustain confidence in his campaign to defeat deflation.
Gross domestic product expanded an annualized 4.1 percent, compared with a preliminary calculation of 3.5 percent, the Cabinet Office said in Tokyo today. Nominal GDP, which is unadjusted for changes in prices, rose 0.6 percent from the previous three months, leaving the economy 7 percent smaller than in the same period in 1997.
People look at packaged food products at Ameyoko market in Tokyo. Photographer: Yuriko Nakao/Bloomberg
June 10 (Bloomberg) -- Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo, talks about the outlook for Japan's economy and the government's policies. Japan’s economy grew more than the government initially forecast in the first quarter, helping Prime Minister Shinzo Abe to sustain confidence in his campaign to defeat deflation. Schulz speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
A man rides a bicycle past a tram in Okayama, Japan. Photographer: Tomohiro Ohsumi/Bloomberg
Stocks surged, aiding Abe’s efforts to maintain momentum as the government moves on to the “third arrow” of Abenomics, the growth strategy to accompany monetary and fiscal stimulus. While BOJ policy makers are meeting today and tomorrow, their policy moves may be constrained by Governor Haruhiko Kuroda’s pledge to avoid “incremental” steps after unveiling unprecedented easing in April.
“This is what Mr. Abe needs for major structural changes this year,” Martin Schulz, an economist at Fujitsu Research Institute in Tokyo, told Bloomberg Television. With a consumption-tax rise looming next year, the economy is in a “sweet spot” that gives the administration the window to pursue its growth agenda after July elections, he said.
The current-account surplus for April was 750 billion yen ($7.6 billion), the finance ministry said in a separate release. Boosted by investment income, that was more than double the 350 billion yen median estimate of analysts.
The Topix Index rose 4 percent as of 9:43 a.m. in Tokyo, snapping a three-day decline, after a better-than-forecast U.S. jobs report boosted confidence in the outlook for the world’s biggest economy.
The gauge plunged 6.9 percent on May 23, part of market volatility that has also spanned bonds and the currency, threatening to undermine confidence in the government’s efforts to drive a sustained recovery.
Capital investment fell 0.3 percent in the first quarter from the previous three months, compared with the government’s initial estimate of a 0.7 percent decline, today’s report showed. Domestic demand rose 0.6 percent, up from an earlier calculation of 0.5 percent.
The yen traded at 98.06 per dollar as of 9.41 a.m. local time, down 16 percent in the past six months. Weakness in the currency boosted the April current-account surplus by increasing income from companies’ investment abroad, said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo.
The first-quarter expansion compared with a 1.2 percent gain in the fourth quarter. Today’s data came as Kuroda chairs his fourth monetary-policy meeting after taking over from Masaaki Shirakawa.
The Bank of Japan is divided over whether to authorize a measure designed to quell bond-market volatility, with some officials concerned it would return the BOJ to a pattern of incremental steps that failed in the past, people familiar with the discussions said recently.
At issue is whether the board should give its financial markets department the power to double the maturity of loans it extends to banks to two years. An opposing view is that the step is a useful backup in case of a spike in fluctuations in the government bond market, the people said, asking not to be named because the talks are private.
Abe, meanwhile, said last week that August is the earliest that his government will present legislation for the growth strategy, which includes efforts to boost investment and curb regulations stifling business. Installed as prime minister after his Liberal Democratic Party won a landslide victory in the lower house of parliament in December, Abe faces a July election for the less powerful upper house.
To contact the reporter on this story: Keiko Ujikane in Tokyo at [email protected]
To contact the editor responsible for this story: Paul Panckhurst at [email protected]