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Jun 8, 2016 12:51 AM

Japan revises upward growth estimate for Jan-Mar, to 1.9 pct

The Associated Press

TOKYO (AP) Japan has revised upward its estimate of growth in the first quarter of this year to 1.9 percent, thanks to smaller drop in business investment than reported earlier.

The estimate released Wednesday was an improvement over the earlier reported 1.7 percent expansion for the world's third-largest economy. The quarterly rate of growth was raised to 0.5 percent from 0.4 percent.

The latest data suggest stronger-than-expected growth in the current quarter. Still, Prime Minister Shinzo Abe judged the situation bleak enough to justify pushing back a planned April 2017 increase in the sales tax by two and a half years, to October 2019.

The latest data showed private consumption, the biggest contributor to growth, rose 0.6 percent in January-March, compared with an earlier estimate of 0.5 percent.

Abe has sought to spur growth by injecting massive sums of money into the economy through central bank asset purchases and government spending, with mixed success. Inflation remains far from the official target of 2 percent, partly due to weak oil prices and partly due to sluggish domestic demand.

That underlying weakness means the Bank of Japan will likely need to expand its asset purchases further in coming months, said Marcel Thieliant of Capital Economics.

"For now, policymakers are facing a number of headwinds," he said in note, pointing to a strengthening in the Japanese yen that is biting into profits of companies with major business operations overseas.

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