Japan’s first-quarter economic growth surpassed market expectations, driven by an uptick in capital investment, marking the second consecutive quarter of positive growth. The current account surplus in April was 76.3% higher than the same month last year, marking the third consecutive month of surplus.
On Monday, Japan’s Cabinet Office released revised figures showing that the country’s real gross domestic product (GDP) increased 0.7% in the first quarter from the previous quarter. Assuming this growth continues for a full year, the annualized rate of growth was 2.7%. In last month’s preliminary estimate, growth was 0.4% quarter-on-quarter and 1. 6% at an annualized rate. The Nihon Keizai Shimbun (Nikkei) reported that the average forecast of 10 private economists for the revised real GDP growth rate was 1.8%, but the actual figure exceeded that. Japan’s first-quarter annualized real growth rate was ahead of the U.S. (1.3%). Japan’s quarter-on-quarter real GDP growth also outpaced South Korea’s (0.3%).
The outperformance of Japan’s first-quarter real GDP over the preliminary estimate and market expectations was largely driven by an increase in private capital investment. In the preliminary estimate, the quarter-on-quarter capex growth was 0.9%, while the revised estimate was 1.4%. The revised figure reflects the first-quarter corporate statistics released by the Ministry of Finance, which showed that capital expenditure was strong, especially in automobile-related industries, the Nikkei analyzed. Investment in semiconductor capex was also said to be solid.
For personal consumption, which accounts for more than half of GDP, the quarter-on-quarter growth rate was revised down to 0.5% from 0.6% 스포츠토토in the preliminary reading. After calculating consumption in March, it is analyzed that the growth rate of consumption such as eating out was somewhat lower than the preliminary estimate. However, as the COVID-19 pandemic stabilized and economic activity normalized, personal consumption showed solid growth, which may have played a role in the overall economic growth in the first quarter.
According to the April balance of payments statistics (preliminary figures) released by the Japanese Ministry of Finance on April 8, the current account surplus was 1.895 trillion yen, up 76.3% year-on-year. The decline in resource prices led to a decrease in imports of crude oil and gas, and an increase in automobile exports due to the easing of the semiconductor shortage contributed to the widening of the current account surplus. Exports rose 2.6% year-on-year to 8.234 trillion yen, while imports fell 4.1% to 8.366 trillion yen.
Meanwhile, in its draft Basic Policy for Economic and Fiscal Operations and Reforms, the Japanese government outlined a policy to rebuild a “strong middle class,” with wage increases and measures to reduce the birthrate at its core. The aim is to realize a virtuous cycle of growth and distribution by inducing the expansion of household income and revitalizing asset management.
“Now is the time to further accelerate the realization of the new capitalism (a signature policy),” Prime Minister Fumio Kishida said at the Economic and Financial Advisory Council meeting on July 7, citing the recent trend of wage increases. The Japanese government is expected to finalize the proposal at a cabinet meeting this month after consultations.
Japan’s economy has been mired in a decades-long recession that has stagnated domestic demand and workers’ wages. The draft law aims to break this cycle and “revive the middle class with a stronger middle class.” For example, in terms of labor market reforms, the plan calls for raising wages, expanding the job-type employment system, and attracting talent to growth industries such as digital. The policy also sets a goal of raising the minimum wage to a national weighted average of 1,000 yen within the year.
Economic support measures for households will also be implemented. Starting next year, the Small Investment Tax Exemption System (NISA) will be expanded to increase households’ asset income, and policy plans to promote household asset management will be finalized by the end of the year. The government plans to support household incomes through a number of channels, including wage increases and asset management, and to encourage increased consumption and capital investment.