Japan Economy Expanded 2.1% in Q1

Japan’s economic growth unexpectedly accelerated in January- March, driven by net contributions from exports. The economy grew at an annualized 2.1% in the first quarter, gross domestic product (GDP) data showed on Monday, beating market expectations for a contraction. It followed a revised 1.6% expansion in October-December.

The surprise expansion was mostly caused by imports declining faster than exports, likely reflecting weak domestic demand, a point of concern for policymakers with a planned sales tax hike scheduled to take effect in October. Underscoring this challenge were private consumption and capital expenditure readings, which both fell in the first quarter, while exports suffered the biggest fall since 2015.