Tokyo----Japan posted stronger-than-expected growth in the first quarter as a pickup in capital spending drove the world's number three economy, but some economists warn that the recovery could be short-lived.
The 1.0 percent expansion in January-March -- or 3.9 percent on annualised basis -- was sharply up from an initial estimate of 0.6 percent growth, according to the Cabinet Office figures.
The upbeat data is good news for Tokyo's efforts to boost the economy, but household spending remains stubbornly weak as the Bank of Japan struggles to push up prices in a bid to end decades of deflation.
Despite wage rises at big firms and a tighter labour market, convincing people to splash out on consumer goods has been a struggle after Japan raised sales taxes last year to help pay down a huge national debt.
The rise hammered consumer spending and pushed the economy into a brief recession. Japan limped out of the red in the last three months of 2014 with Monday's surprise figures offering some hope for a recovery.
"Capital spending is the last piece of the puzzle, with exports and consumption showing signs of recovery," said Atsushi Takeda, an economist at Itochu Corp.
"A sustainable economic recovery is starting."
Corporate investment rose 2.7 percent from the previous quarter, well above an initial 0.4 percent expansion.
The growth figures fell in line with the Bank of Japan's assessment that the economy was on the upswing, and they may push back any timeline for the central bank to launch more stimulus.
However, bank chief Haruhiko Kuroda has been forced to push back a timeline for hitting a 2.0 percent inflation target -- a cornerstone of Prime Minister Shinzo Abe's plan to kickstart the deflation-plagued economy -- although he insists that healthy price rises are around the corner.
- Uncertain demand -
The data on Monday contrasted with revised US figures that showed the world's top economy contracted an annualised 0.7 percent in the first three months of the year, with the impact of a ports slowdown and cautious consumer spending worse than originally estimated.
The US is a major market for Japanese exporters and despite the apparent strength of Monday's figures, they also raised a red flag as firms' inventories rose from three months earlier.
"This (inventory buildup) implies that the underlying pace of demand was not nearly as strong as the headline suggests," Marcel Thieliant from Capital Economics said in a commentary, adding that consumer spending and industrial output remained lacklustre.
AFP
