TOKYO (MNI) – Japan’s economy expanded strongly in the
January-March period from the previous quarter, the second consecutive
quarterly gain, thanks to healthy gains in net exports and private
consumption, economists and analysts said.

Net exports rose on the back of the recovering global economy,
especially in emerging countries, while private consumption was spurred
by government policy measures, they said.

Real GDP rose 1.3% quarter-over-quarter in the first quarter this
year, an annualized growth rate of 5.6%, according to the median
forecast of economists surveyed by MNI. This compares with a revised
0.9% quarter-on-quarter gain and an annualized rise of 3.8% for the
October-December period. `

The forecasts for the January-March period ranged between a 1.1%
rise and a 1.6% gain from the previous quarter, or an annualized rise of
between 4.6% and 6.5%.

The Cabinet Office will release its preliminary GDP estimate for
the first quarter at 0850 JST on Thursday (2350 GMT on Wednesday).

The data are expected to show that the risks of a double-dip
recession in the Japanese economy have diminished considerably.

Economists expect domestic demand, including private consumption
and capital spending, as well as foreign demand to have boosted real
GDP growth for the first quarter.

Nikko Cordial Securities’ chief market economist Mari Iwashita said
the pace of economic growth for the first quarter will have accelerated
from that of the fourth quarter of 2009 due to stronger than expected
exports and private consumption.

Iwashita estimated the positive contribution from domestic demand
will be 1.1 percentage points, up from 0.4 percentage points in the
fourth quarter.

She also expects capital spending to have risen 1.2% from the
previous quarter, up from a 0.9% rise in the October-December period.

Sumitomo Mitsui Asset Management chief economist Akiyoshi Takumori
expects capital spending and private consumption to have risen by 3.6%
and by 0.9% from the previous quarter, respectively.

The strong capital spending estimate is based on capital goods
shipments for the period, which jumped 14% on quarter, he said.

Meanwhile, consumer spending was boosted by the rush to buy
energy-saving flat-panel televisions that come with reward points ahead
of the revision to the government incentive program in April, he said.

Consumer spending is expected to have risen for the fourth straight
quarter, he added.

BNP Paribas chief economist Ryutaro Kono expects export growth for
the first quarter to have accelerated to 6.6% from the previous quarter
from 5.0% in the fourth quarter last year.

He added that the GDP data will likely show that the recovery of
exports is gradually filtering through to domestic demand.

Kono predicted the positive contribution from domestic demand to
have risen to 0.9 percentage point, up from a 0.4 percentage point in
the previous quarter.

The preliminary GDP estimate is calculated mainly using supply data
and the Cabinet Office will recalculate the estimate based on demand
data next month.

There is the possibility that strong capital spending will be
revised.

In the January-March quarter, Japanese industrial production rose
6.7% quarter-over-quarter, up from the 5.9% rise in the previous
quarter and up for the fourth consecutive quarter.

Japan’s trade surplus stood at Y948.91 billion in March, the 12th
consecutive monthly trade surplus following a downwardly revised surplus
of Y649.55 billion in February (preliminary +Y650.98 billion). March
exports posted the fourth straight year-on-year rise on recovering
global demand for Japanese cars and semiconductors.

The Q1 GDP outcome will likely support the Bank of Japan’s baseline
view that the Japanese economic recovery will accelerate in fiscal 2010
through fiscal 2011.

“Since improvements in the employment and income situation are
likely to gradually become evident as corporate activity becomes more
vibrant, the pace of increase in private consumption and housing
investment is likely to accelerate,” the BOJ said in the semiannual
Outlook Report released on April. 30.

For fiscal 2010, the BOJ boar’s median forecast for real GDP is
+1.8%, revised up from the January forecast of +1.3%. For fiscal 2011,
the median forecast is +2.0%, compared with +2.1% forecast in January.

The forecasts for real GDP data for the first quarter

Quarter-on- Annualized
Quarter

NLI Research Institute 1.6% 6.5%
Sumitomo Mitsui
Asset Management 1.6% 6.4%
Nochu Economic Research 1.6% 6.4%
BNP Paribas 1.5% 6.3%
Dai-Ichi Life Research Institute 1.5% 6.1%
Daiwa Institute of Research 1.5% 6.0%
Mizuho Research Institute 1.4% 5.9%
Nikko Cordial Securities 1.4% 5.6%
Barclays Capital 1.3% 5.2%
Nomura Securities 1.3% 5.5%
Mitsubishi UFJ Morgan
Stanley 1.3% 5.2%
JP Morgan 1.2% 5.0%
Morgan Stanley 1.2% 4.9%
Japan Research Institute 1.1% 4.6%
————————————————————————
Median 1.3% 5.6%
————————————————————————
Real GDP for the fourth quarter 0.9% 3.8%

tokyo@marketnews.com
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