The Japanese economy grew 1.6% year on year in the first quarter

Government data showed that the Japanese economy grew by 1.6% on an annual basis in the first quarter of the year, as strong private consumption and an unexpected increase in capital spending offset the decline in external demand.

The GDP figures for the first quarter far exceeded economists’ median estimate of 0.7% year-on-year growth.

Private domestic consumption, which makes up more than half of the economy, grew 0.6% on a quarterly basis in the January-March period, and capital spending, the main driver of growth, rose 0.9%, versus economists’ estimates for a decline.

A drop in external demand, or net exports, trimmed the first-quarter gains by 0.3 percentage points, which was offset by a 0.7 percentage point increase in domestic demand.