The Cabinet Office's preliminary report on May 17 stated that Japan's gross domestic product in the January-March period increased by 1 percent from the previous quarter in real terms or an annualized 4.1 percent. This performance, better than expected by private-sector analysts, is mainly attributed to the acceleration of public-works projects for reconstruction in the areas damaged by the 3/11 disasters. But the government and enterprises should guard against several downside risks.

Investment in public works projects increased 5.4 percent, the first rise in three quarters. Exports, which were stagnant in the previous quarter, rose 2.9 percent as exports to the United States picked up. Consumer spending expanded 1.1 percent — a rise for four consecutive quarters.

It is reported that robust public-works projects have even caused a labor shortage in the construction industry in the disaster areas. But there is a view that demand from reconstruction public works projects will start gradually decreasing after peaking in the April-June period.