Japan's economy grew at a better-than-expected 1.9 percent annual rate in the first quarter, marking the fifth straight quarter of expansion driven by continued consumer spending, solid company investment and booming exports
Gross domestic product (GDP), the value of goods and services a nation produces, show the latest rebound for the world's second largest economy may continue for some time, the Japanese Cabinet Office said.
The economy has shown signs of revival in recent years after suffering stagnation for more than a decade. The government said Friday the economy grew 3.0 percent for the fiscal year ended March 31, chalking up its fourth straight fiscal year of growth. Past spurts of growth have disappointed by repeatedly dwindling into recession.
Japan, the world's second largest economy, grew 0.5 percent in the January-March period from the previous quarter, and if that pace had continued for a year, the economy would have expanded 1.9 percent.
Economists surveyed by Dow Jones Newswires had predicted a tepid 0.2 percent gain from the previous quarter.
"The really good news is that growth is extremely balanced, and also that private demand is very, very strong," said Jesper Koll, chief economist at Merrill Lynch Japan.
In the fourth quarter, the economy grew a stunning annual pace of 4.3 percent, but the dwindling pace in the first quarter does not signal an end to overall growth, government official Fumikazu Hida told reporters.
Exports surged 2.7 percent in the quarter, consumer spending climbed 0.4 percent, and private sector investment jumped 1.4 percent, he said.
"The pace of growth may not have kept up, but consumption and investment remain solid," Hida said.
The government is forecasting growth of 1.9 percent for the fiscal year through March 2007.
In the past, Japan has often had to rely on exports to keep growth going, but in recent quarters consumers and companies alike are spending to bolster growth — making for a healthy bullish outlook.
The Japanese central bank's policy board decided to keep interest rates at zero for awhile longer as it monitors the economy.
But analysts say the bank is likely to raise the key short-term interest rate to 0.25 percent in July with some expecting another increase to 0.5 percent by the end of the year.
Looking back over recent years, Japan's economy grew 1.7 percent in fiscal 2004, 2.3 percent in fiscal 2003, and 1.1 percent in fiscal 2002, after shrinking 0.8 percent in fiscal 2001.