5.6 percent Japanese economic growth called 'fantastic'

By Yuri Kageyama
Associated Press

TOKYO — Japan's economy grew at a better-than-expected annual pace of 5.6 percent during the first three months of this year, chalking up eight straight quarters of expansion in the best showing in a decade for the long struggling nation.

Strong exports combined with surprisingly solid numbers in consumer spending to show that Japan's gross domestic product, or the value of its goods and services, grew 1.4 percent during the quarter ending March 31 from the previous quarter.

The data released yesterday confirm the emerging view among analysts that the world's second-largest economy appears to be on a recovery track after more than a decade of slowdown when sporadic periods of growth alternated with downturns.

"All we can say is that the numbers are fantastic," said Tatsuya Torikoshi, senior economist at Daiwa Institute of Research in Tokyo. "If we look at just the numbers, Japan is leading global growth."

The improving economy has helped to drive the recovery of the Japanese tourism market in Hawai'i. In March, international visitor arrivals, made up largely of Japanese tourists, increased by 6.6 percent over the same month in 2003, when many visitors stayed away in response to SARS, the Iraq war and a sluggish economy.

Japan's eight-quarter stretch of growth was the best since the country racked up nine straight quarters of growth from the first quarter of 1995 through the first quarter of 1997.

The results beat the forecasts by economists surveyed by Dow Jones Newswires.

Yoshihiko Senoo of the Cabinet Office said purchases of clothing and life insurance helped increase consumer spending in the January-March period while exports continued to boom, especially in electronics parts and autos.

Exports surged 3.9 percent, while private consumption grew 1 percent, the Cabinet Office said.

Capital investment edged up 2.4 percent as factories and stores were built.

Advertiser staff contributed to this report.