Japan revises growth to annual 4.1% in boost for Abenomics

Consumer confidence in May was at its highest level since 2007. Japan's GDP expanded an annualised 4.1%

Japan's economy grew more than the government initially estimated in the first quarter, helping Prime Minister Shinzo Abe to sustain confidence in his campaign to defeat deflation.

GDP expanded an annualised 4.1 per cent, compared with a preliminary calculation of 3.5 per cent, the Cabinet Office said in Tokyo today. Nominal GDP, which is unadjusted for changes in prices, rose 0.6 per cent from the previous three months, leaving the economy 7 per cent smaller than in the same period in 1997. Consumer confidence in May was at its highest level since 2007, a Cabinet Office survey showed.

Stocks surged, aiding Abe's efforts to maintain momentum as the government moves on to the "third arrow" of Abenomics, the growth strategy to accompany monetary and fiscal stimulus. While BoJ policy makers are meeting today and tomorrow, their policy moves may be constrained by Governor Haruhiko Kuroda's pledge to avoid "incremental" steps after unveiling unprecedented easing in April.

"This is what Abe needs for major structural changes this year," Martin Schulz, an economist at Fujitsu Research Institute in Tokyo, told Bloomberg Television. With a consumption-tax rise looming next year, the economy is in a "sweet spot" that gives the administration the window to pursue its growth agenda after July elections, he said.

Rising income
The current-account surplus for April was 750 billion yen ($7.6 billion), the finance ministry said in a separate release. Boosted by investment income, that was more than double the 350 billion yen median estimate of analysts.

The Topix index was up 5.2 per cent today in Tokyo, the biggest rise since March 2011, after a better-than-forecast US jobs report boosted confidence in the outlook for the world's biggest economy.