Japan May Revise First-Quarter GDP Higher With Spending Increase

Japan’s economy probably grew more than the government initially estimated in the first quarter, economists said after a report showed companies increased business investment.

Gross domestic product probably grew at a 2.1 percent annual pace in the three months that ended March 31, compared with a preliminary reading of 1.7 percent growth, according to the median forecast of 12 economists in a Bloomberg survey. A Finance Ministry report on Wednesday showed that capital spending excluding software rose 1.4 percent in the first quarter from the previous quarter, a figure that will be used to calculate revised GDP on June 8.

The figures come as Japanese Prime Minister Shinzo Abe delayed a rise in the nation’s sales tax, and may announce additional fiscal spending. Abe told fellow leaders at a Group of Seven summit last week in Japan that there is a significant risk of the world economy falling into a crisis on the scale of the 2008 financial crisis if the right policy measures aren’t taken.

“A better GDP reading will be good for Japan but it doesn’t change the view that Japan’s economy will probably have a weak recovery this year,” said Hiroaki Muto, chief economist at Tokai Tokyo Research Center in Tokyo. “With the yen’s gains this year and a continued slowdown in emerging nations, exports and corporate profits are slowing, meaning there’s little sign for a brighter picture of the economy.”

The finance ministry’s report showed capital spending excluding software rose 4.3 percent in the first quarter from a year earlier, better than the median forecast of a 4 percent gain in a separate survey of economists. Company profits fell 9.3 percent in the first quarter from a year ago.

From the previous quarter, business investment declined 1.4 percent in the first quarter, the government’s GDP report showed on May 18. The government will probably revise capital spending upward to a 0.2 percent drop, according to the Bloomberg survey.

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