Japan's real gross domestic product (GDP) grew 0.5% in the first quarter, according to a preliminary estimate, marking a second consecutive quarter of expansion on the back of an export recovery. The data has heightened the prospect of an interest rate hike.
Japan's Cabinet Office announced Monday that real GDP grew 0.5% in the first quarter, or 2.1% on an annualized basis. Real GDP thus continued its growth for a second straight quarter, following a 0.2% gain in the fourth quarter of last year. The real GDP growth rate as of the end of last year stood at 0.8%.
Driving the growth were exports of goods and services, which rose 1.7%. This reflected automobiles, ships and industrial machinery escaping the threat of U.S. reciprocal tariffs. However, inbound consumption by foreign visitors to Japan, which is classified as exports under GDP, fell 1.6%. This was attributed to a decline in tourists from China and the Middle East.
Private consumption, which accounts for half of GDP, rose 0.3%. Though small, the gain widened and remained positive for a fifth straight quarter. Capital investment also increased 0.3%, rising for a second consecutive quarter. Housing investment rose 0.5%, marking a second straight quarter of gains. Government consumption rose 0.1%, increasing for a fourth consecutive quarter. Public investment rose 1.4%, returning to positive territory for the first time in three quarters.
The GDP deflator, which indicates overall price trends, rose 3.4% from a year earlier. Nominal GDP increased 0.8% from the previous quarter, or 3.4% on an annualized basis. On an annualized basis, real GDP stood at 593.6933 trillion yen (5,605.1178 trillion won) and nominal GDP at 677.2334 trillion yen (6,393.4219 trillion won).
