Japan's GDP growth better than expected

Japan’s GDP growth better than expected

Japan's GDP (Gross Domestic Product) grew 1.3% during the January-March 2005 period or at an annualized rate of 5.3% as the brisk domestic demand offset weak exports, said the Japan's Cabinet Office. Economists had been expecting a growth rate of 0.6% or at annualized rate of 2.5%. However, looking forward, certain economists indicate that Japan's economic growth may slow in the near future because of increasing inventories and a probable slowdown in corporate capital spending. On the other hand, domestic demand will continue to support economic growth. Economic growth in the last quarter of 2004 was fuelled by increased corporate investment and consumer spending, which has replaced exports as the driving force of economic growth. Private consumption increased 4.7% year on year in the final quarter. This accounted for 0.7% of GDP growth. On the other hand, exports fell 0.2% in the first three months of the year due to a slowdown in demand for information technology products in the US and Asian countries. Japan's exports to China, which had been expanding steadily, also declined as sales of ships and factory machines fell, coupled with curb investments by the Chinese government.