Japan Q1 GDP Beats Forecasts Despite Energy Concerns

Japan’s economy grew an annualised 2.1% in the first quarter, outperforming market expectations and extending the country’s recovery before rising Middle East energy prices clouded the outlook.

The Japan Q1 GDP figures showed real gross domestic product rose 0.5% from the previous quarter, exceeding forecasts for a 0.4% increase.

Private consumption, which accounts for more than half of Japan’s economy, rose 0.3%, while capital expenditure also increased 0.3%. Net external demand added 0.3 percentage point to overall growth.

Analysts warned that momentum could weaken later in the year as surging oil prices increase inflationary pressures and squeeze corporate profitability because of Japan’s heavy dependence on Middle East energy imports.

The stronger-than-expected figures nevertheless provide support for investor confidence in Japan’s domestic recovery and corporate earnings outlook.