Roundup: Japan's Q1 economic growth upgraded to 1.9 pct increase, but forecast remains gloomy

The Japanese government said Wednesday that the economy here expanded an annualized 1.9 percent in the the first quarter of this year on an inflation-adjusted basis, up from a preliminary report issued last month, owing to private consumption and business investment declining less than initially thought.

The expansion in real gross domestic product translates to a 0.5 percent increase from the previous quarter, the Cabinet Office said on Wednesday.

It came in ahead of a preliminary reading of 1.7 percent released on May 18, as private consumption, business spending and the effects of the leap year contributed to the upward revision.

The upwardly revised data may provide some momentary relief to Prime Minister Shinzo Abe who is under fire for the ineffectual effects of his "Abenomics" economic policy mix and for reneging on a consumption tax hike plan, which he has postponed for two and a half years, due to the likelihood a hike as per schedule would batter domestic demand, further zap consumption and wages and usher in yet another recession for the world's third-largest economy under Abe.

The revised data released by the Cabinet Office showed that corporate capital spending, a vital economic driver, declined 0.7 percent compared to a preliminary 1.4 percent fall, while consumer spending, which accounts for around 60 percent of Japan's GDP, was upgraded to a 0.6 percent increase, marginally higher than a preliminary 0.5 percent rise.

In the first quarter, exports remained flat in the revised data at a 0.6 percent increase, while imports were revised upwards from a 0.4 percent decline, from a preliminary 0.5 percent drop.

Private housing investment came in at 0.7 percent in the recording quarter, compared to 0.8 percent, while public investment was down 0.7 percent, revised downward from a preliminary growth of 0.3 percent.

On quarter-to-quarter basis and in nominal terms, Japan's economy increased 0.6 percent from a preliminary increase of 0.5 percent.

But despite the upward revision, economists remained skeptical about the future course of Japan's economy, among downside pressures from the yen's appreciation, falling overseas demand, choked domestic consumption and household spending and circumspect business spending, amid a backdrop of stagnant wage increases, as Abe's blueprint for fiscal rehabilitation still, at best, remains murky.

"Even with the GDP revision, there's no change to the picture that Japan's economy has plateaued and has no clear driver to boost momentum in the months ahead," Koya Miyamae, an economist at SMBC Nikko Securities in Tokyo, was quoted as saying, adding, "The effect of the extra day from the leap year may have magnified first-quarter growth by about 0.9 percentage points on an annualized basis."

Meanwhile, Satoshi Osanai, an economist at the Daiwa Institute of Research, was quoted as saying, "What we saw is a modest upward revision and there is no change in the basic view that the Japanese economy is experiencing a lull. Consumers are willing to save money rather than spend."

"Now that the consumption tax hike will be delayed, one of the key elements for consumer spending is continued growth in wages," said Osanai. Enditem