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Japan’s Buoyant Growth Figures Mask Weaknesses in Economy

  • Capital spending continued to rise, but consumption stalled
  • Expansion supports view sales tax hike can go ahead in October
In Japan, The Rise Of The Machines Solves Labor And Productivity
Photographer: Kiyoshi Ota/Bloomberg
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Japan’s faster-than-expected growth in the first quarter offers Prime Minister Shinzo Abe’s government a figure that backs its view of an economy holding up well for a tax increase while papering over underlying weaknesses.

Business investment continued to increase in the first three months of the year despite crackling trade tensions, helping nudge up growth from initial estimates. But outside the growing capital spending the expansion was based almost entirely on the technical factor of falling imports outpacing export declines.