Japan's Q1 GDP Grows 0.5%, Annualized Rate Up 2.1%

On May 19, Japan's Cabinet Office announced that the country's real Gross Domestic Product (GDP, preliminary figure) growth rate for the first quarter of this year was 0.5%.

On an annualized basis, GDP grew 2.1%. This figure significantly exceeds the average forecast of 1.7% by analysts in a Reuters survey, and is also higher than the previous quarter.

Scenery of Shibuya, Tokyo, Japan. Photo by TASS Yonhap News Agency

The quarter-on-quarter growth rate of real GDP has now shown positive growth for two consecutive quarters, following a 0.2% increase in the fourth quarter of last year.

By sector, exports increased by 1.7%, driving overall growth. Personal consumption, which accounts for half of GDP, rose by 0.3%, and corporate capital investment also increased by 0.3%.

However, there have been concerns that the impact of the Iran war has not been reflected in these figures. Norihiro Yamaguchi, Chief Japan Economist at Oxford Economics, commented, "Japan's GDP increased by 0.5% in the first quarter, showing solid growth, but we view first-quarter GDP as a lagging indicator, and expect the economy to come under pressure from higher energy costs going forward."

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