From the previous quarter, the world’s second-largest economy grew 0.8 per cent, with net exports contributing 0.5 point to the growth. At the same time the government revised down its estimates for GDP growth in the fourth quarter of 2007 to a quarter-on-quarter rate of 0.6 percent, from 0.9 percent previously.
A rebound in housing investment and rising consumer spending also helped to ensure a third consecutive quarter of positive growth for Asia's largest economy. It is possible, however, that consumer spending has been helped somewhat by the fact that 2008 is a leap year, giving shoppers an extra day in February.
Consumer spending grew by 0.8 percent in the first quarter from the previous three months, while exports were up 4.5 percent, despite weakening demand in a US economy still labouring under a housing slump and a credit crunch.
Housing investment rose 4.6 percent, the first positive reading in five quarters. It followed a 9.2 percent fall in the fourth quarter, which was the biggest decline since April-June 1997 as the sector reeled from tighter building regulations implemented since last June.
As can be seen in the above chart, contruction had been virtually flat in Japan for some time before the sudden downward jolt last year. Some sort of recovery in the situation was only to be expected, but will this current surge be sustainable? If we look at new housing starts, we find they fell 15.6 per cent in March from a year earlier, significantly more than most analysts were expecting, so it is not at all clear that construction will continue to push upwards.
Corporate capital spending on the other hand fell by 0.9 percent as companies became less willing to invest in new factories and equipment amid an increasingly tough business climate.
Recent data showed Japan's exports to Asia rose 1.9 percent in March, the smallest increase since May 2005, as growth of shipments to China slowed to 3.2 percent from 14.9 percent, the slowest pace since June 2005.
The close association between exports and GDP quarterly growth can be seen in the following chart, where it is also clear that household consumption played a rather large part in Q1 2008 growth, the real question is why?
