AFP, Tokyo :
Japan sidestepped a recession after its economy grew in the first quarter, preliminary data showed Wednesday, but efforts to cement recovery in the world’s number three economy were gaining little traction. Gross domestic product expanded by 0.4 percent between January and March-or 1.7 percent at an annualised rate-after a contraction in the last three months of 2015.
A consumer spending rebound helped drive the better than expected figures, but the leap year added another day of production-and spending-to the economy’s performance.
The fresh data will do little to buoy hopes for Prime Minister Shinzo Abe’s faltering growth blitz.
His bid to revive Japan’s once-soaring economy, dubbed Abenomics, was shaken by a bloodbath on equity markets at the start of the year and a resurgent yen which has taken a bite out of Japan Inc’s profits.
Local media have suggested Abe will delay plans to raise Japan’s consumption tax over concerns it could damage the already fragile economy.
But the premier on Wednesday insisted his growth plan was making headway, and that no final decision has been made on the levy increase.
“I will make the appropriate decision at an appropriate time,” he told reporters.
A consumption tax rise in 2014 — seen as key to helping pay down Japan’s enormous national debt-was blamed for ushering in a brief recession.
This week the government approved a 778 billion yen ($7.1 billion) extra budget in response to April’s deadly earthquakes, which prompted factory shutdowns in southern Japan.
“But even if the government delays the tax hike, it still needs to set a course for getting public finances on a sound footing, which is not an easy job,” said Yoko Takeda, chief economist at Mitsubishi Research Institute.
“The economy is in a tough situation with the strong yen hurting corporate earnings, stalled wages and a lack of confidence among consumers. There are going to be some tough times ahead.”
Japan sidestepped a recession after its economy grew in the first quarter, preliminary data showed Wednesday, but efforts to cement recovery in the world’s number three economy were gaining little traction. Gross domestic product expanded by 0.4 percent between January and March-or 1.7 percent at an annualised rate-after a contraction in the last three months of 2015.
A consumer spending rebound helped drive the better than expected figures, but the leap year added another day of production-and spending-to the economy’s performance.
The fresh data will do little to buoy hopes for Prime Minister Shinzo Abe’s faltering growth blitz.
His bid to revive Japan’s once-soaring economy, dubbed Abenomics, was shaken by a bloodbath on equity markets at the start of the year and a resurgent yen which has taken a bite out of Japan Inc’s profits.
Local media have suggested Abe will delay plans to raise Japan’s consumption tax over concerns it could damage the already fragile economy.
But the premier on Wednesday insisted his growth plan was making headway, and that no final decision has been made on the levy increase.
“I will make the appropriate decision at an appropriate time,” he told reporters.
A consumption tax rise in 2014 — seen as key to helping pay down Japan’s enormous national debt-was blamed for ushering in a brief recession.
This week the government approved a 778 billion yen ($7.1 billion) extra budget in response to April’s deadly earthquakes, which prompted factory shutdowns in southern Japan.
“But even if the government delays the tax hike, it still needs to set a course for getting public finances on a sound footing, which is not an easy job,” said Yoko Takeda, chief economist at Mitsubishi Research Institute.
“The economy is in a tough situation with the strong yen hurting corporate earnings, stalled wages and a lack of confidence among consumers. There are going to be some tough times ahead.”
