Surprise upbeat Japan's GDP data: May 20, 2015

Intra-Day Market Moving News (USD/JPY)
20 May 2015   00:19GMT

Japan's economy grew at its fastest pace in a year in January-March on modest increases in consumption and capital expenditure, adding to evidence the country is steadily emerging from last year's recession.

The world's third-largest economy expanded an annualised 2.4% in the first 3 months of this year, more than a median market forecast for a 1.5% increase and following a revised 1.1% expansion in October-December, data from the Cabinet Office showed.

The upbeat GDP reading could be a source of solace for policymakers, who are hoping that companies will boost capital expenditure and wages enough to reflate the economy and put it on track for a sustained exit from deflation.

The annualised increase in gross domestic product (GDP) was bigger than a 0.2% gain in the U.S. and 1.6% growth in the euro zone in the January-March quarter.
On a quarter-on-quarter basis, Japan's GDP grew 0.6% in the first 3 months of this year, more than a 0.4% increase expected in a Reuters poll.

The data will be closely scrutinised at the Bank of Japan's 2-day rate review that ends on Friday. The central bank is widely expected to maintain its massive stimulus programme and rosy assessment of the economy.

These comments from Japan EcoMin Amari:
'weakness still seen in capex.'
'Japan economy likely to recover moderately;
must be mindful of risks such as possible slowdown in overseas economies; improvements in jobs, income conditions, as well as effect of oil price falls likely to underpin recovery;
private consumption, capex, housing investment grew, contributing to Q1 GDP expansion;
exports contributed to economic growth due to moderate recovery in overseas economies.'