Japan economy to continue recovery on gov't stimulus

10:36 | 22/05/2019 Global Economy

Finance Minister Taro Aso said Tuesday the Japanese economy will continue to recover on fiscal stimulus, after government data the previous day showed surprising growth.

A street in Tokyo, Japan - Source: japantimes.co.jp

"It's not at all bad," Aso told a press conference in reference to the 2.1 percent rise in January-March real gross domestic product, released Monday, apparently rejecting analysts' view that the headline figure was up due to a technical reason and did not reflect the actual economic situation.

"I knew the economy would improve" as the government is implementing stimulus measures under its budget for fiscal 2019 that started April, Aso, who doubles as deputy prime minister, said.

The increase in inflation-adjusted GDP for the final quarter of fiscal 2018 marked a second straight quarterly expansion, despite weaker exports amid an economic slowdown in China. It beat market forecasts of slower growth or even a contraction.

But the data also signaled sluggish consumption and business investment, adding to the view that the economy will likely be supported by government spending including on public works projects.

Many private-sector analysts said the GDP increase was due to a faster decline in imports than exports, which pushed real GDP higher.

Aso's comments came amid market speculation that Japan may postpone a consumption tax hike scheduled for October in a bid to safeguard growth, and that Prime Minister Shinzo Abe may call a general election this summer to seek voter approval for a delay.

Economy, Trade and Industry Minister Hiroshige Seko also sounded positive about the economy.

Employment and income conditions as well as corporate earnings have remained "extremely firm," Seko told a separate news conference. "Japan's economy will remain on a moderate recovering track" on stable capital spending, he said.

Theo Mainichi.jp