Japan’s economy has done much better than it was anticipated. For the first quarter of the year, the Gross Domestic Product of the country gained 1.6% on the quarter, while on the year, the growth amounted to 6.7%, above the preliminary result of 5.9% and market expectations of 5.6%. In a report on Bloomberg, John Dawson commented that the growth could be impacted by the consumer tax hike in April, which caused the increase in spending during the first quarter and therefore helped to boost the economy.
However, the same increase in tax might have painful consequences for the next quarter results. At the beginning of April, Japan has raised the consumption tax to 8% from the previous 5%. The Forecast for the second quarter stands at 3.5%, Dawson stated.
Nevertheless, currently everyone seems to be excited that Japan’s economy did well in the first three months. The Nikkei 225 (INDEXNIKKEI:NI225) Index, jumped at the market opening, although during the day it slowed down and closed 0.31% up.
The first quarter GDP growth, looks even more impressive when compared to the last year over the quarter appreciations. For the first quarter of 2013, the GDP grew by 4.9%. For the second and third quarters, the gain amounted to 3.5% and 1.3% respectively, while for the fourth quarter, the GDP of Japan edged up by 0.3%.
In addition, we should mention that for the same period, the first quarter of 2014, the U.S. GDP declined by 1% on the quarter. The Eurozone, inched up by 0.9% during the same period.
Watch the full Bloomberg report: