Japan growth revised higher in first quarter

Japan's economy grew more than initially estimated in the first quarter, data showed Thursday, with exports keeping a recovery on track as signs emerged that domestic demand is strengthening. A fourth straight quarter of expansion saw gross domestic product in the January-March period grow at an annualised 5.0 percent, beating last month's estimate of 4.9 percent and expectations of 4.0 percent. "The data was stronger than expected," said Yoshiki Shinke, senior economist at Daiichi Life Research Institute. "It confirmed that the growth trend has continued."

And there were signs that Japan's domestic demand, hindered by deflation and a drag on growth, may also be strengthening after private and household consumption were both revised up from 0.3 percent to 0.4 percent. Consumer sentiment improved in May to a reading of 42.8 from 42.0 in April according to a survey of 6,720 households. Any reading below 50 however means pessimists still outweigh optimists.

Analysts said data may show the recovery was starting to percolate through the wider economy, good news for the government as it looks to tackle the world's largest public debt mountain without derailing the revival.

"Domestic demand is improving," said Hiroshi Watanabe, economist at Daiwa Institute of Research. "Continued economic recovery should make things easier for politicians to discuss improving fiscal conditions," he said.

The country has been stuck in the deflationary doldrums since March 2009 following the global economic downturn, as falling consumer prices deter corporate investment and consumption.

Exports, particularly to emerging Asian markets such as China, are driving Japan's recovery from recession but its dependence on them was illustrated by their 0.9 percent contribution to the quarterly growth figure of 1.2 percent.

TOKYO, (AFP)