The Cabinet Office has announced that Japan's gross domestic product grew 0.8 percent in real terms in the January-March period from the previous quarter for an annualized growth of 3.3 percent. The growth represents an economic expansion for three consecutive quarters and exceeded Japan's potential growth rate of 1.5 percent to 2 percent. Consumer spending was fairly solid but the economic expansion considerably relied on exports. As such, optimism on future growth is not warranted and the country's economic performance needs to be closely watched.
Consumer spending — which accounts for more than half the nation's GDP — increased by 0.8 percent, exceeding the 0.4 percent growth rate registered in the October-December 2007 period. Although wages increased to some extent, price hikes in consumer goods are likely to dampen consumer demand.
Housing investment grew by 4.6 percent, the first increase in five quarters, after confusion caused by a revision of the Building Standards Law finally settled.