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Japan’s first quarter growth higher than thought at 0.6%

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Pedestrians cross the street in Tokyo’s Shinjuku district. TOSHIFUMI KITAMURA/AFP

Japan’s first quarter growth higher than thought at 0.6%

Japan's economy grew slightly faster than initially thought in the first quarter of this year, due partly to better-than-expected corporate investment, official figures showed on Monday.

The world’s third-biggest economy grew 0.6 per cent quarter-on-quarter, up from the preliminary figure of 0.5 per cent, the cabinet office said.

The latest data was being closely watched amid speculation Prime Minister Shinzo Abe’s government could postpone a planned sales tax hike for the third time if the data was very weak.

A report on Sunday however said Abe’s government is now expected to hike the tax to 10 per cent from eight per cent in October, as scheduled, with the ruling party expecting a landslide victory in an upper house election planned next month.

It was the second successive expansion for the Japanese economy after growth of 0.5 per cent in the fourth quarter of last year and defied gloomy expectations by analysts who predicted a small decline at the start of this year.

As in the preliminary data, net exports contributed strongly to the latest growth figures but only because the fall in imports outweighed a decline in exports, the cabinet office said.

Corporate investment was slightly stronger than estimated in the preliminary data, it said.

The latest indication of Japan’s economic health comes amid uncertainty over the global economy, including US-led trade tensions, Brexit and other factors.

The world’s top financial policymakers admitted on Sunday that trade tensions had worsened and posed a risk for the global economy, after a G20 meeting that laid bare differences between the US and other nations.

Following 30 hours of wrangling in what one official described as a “tense” atmosphere, G20 finance ministers and central bank chiefs produced a hard-fought final statement acknowledging that “growth remains low and risks remain tilted to the downside”.

“Most importantly, trade and geopolitical tensions have intensified,” the G20 said, adding they “stood ready to take further action” if required.

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