Japanese Chemical Trader blog

Japan Chemical Trading Blog

Q1 Real GDP of Japan Grew by 5.9% in Annual Rate

On May 15, the Cabinet Office, Government of Japan announced that the real GDP in January-March grew 1.5 % from the previous quarter (October-December), showing a 5.9% increase at an annualized rate.

From the October-December 2012 period, positive growth from 6 consecutive quarters had been observed. This is because the consumer spending in Japan increased due to a last-minute surge in demands before an increase in the consumption tax rate on April 1.

No doubt that from April onwards a reactionary fall will cause a significant drop in consumer spending. The question is if the spending will be on the recovery after that, as the government forecasted.

These days, labor shortage and the raises in hourly wages of part-time workers have been actively discussed. They are good news for economic improvement.

Based on the Cabinet Office’s economic prospective for 2014,“The increase in the consumption tax rate will lead to the creation of sustainable finance, social security and to contribute to further public reassurance. Thus, it will become the basis for the continuously growing public consumption.”

However, the funds that the government has obtained must not be wasted by lavish spending to unnecessary things.