TOKYO: Japan’s economy improved for the second straight quarter in the January-March period, with stronger housing investment helping it climb an annualized 2.4%, the Cabinet Office said Wednesday.
A preliminary report showed private consumption in the fourth quarter of fiscal 2014 expanded 0.4%, better than the median estimate of 0.2% obtained in a QUICK survey of economists.
“Consumer spending is expected to continue to expand moderately, supported by wage increases and cheap oil. However, it should have grown more considering how low crude oil prices were,” said Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute.
Despite the improvements, they were not robust enough to contribute to gross domestic product growth for the full year — Japan’s economy shrank for the first time in five years for fiscal 2014 ended March. Household spending was squeezed by the sales tax hike in April last year and higher consumer prices, causing a 1.0% decline in GDP for the year.
Fitch Ratings recently downgraded Japan’s credit rating from A plus to A, citing a delay in the planned sales tax increase due to the government’s failure to rein in swelling public debt. For fiscal 2015, the government estimates 1.5% growth, boosted by cheap crude oil.
