Japan Eco Min Motegi: Spending, Capex To Continue Leading GDP

     TOKYO (MNI) - Consumer spending and business investment are expected to

continue leading Japan's modest economic recovery despite weak Q1 GDP data,

Economic and Fiscal Policy Minister Toshimitsu Motegi said Wednesday.

     The gross domestic product posted the first contraction in nine quarters in

Q1, down a real 0.2% on quarter, or an annualized 0.6%, as the severe winter

weather and high fresh food and fuel prices hurt consumption, data from the

Cabinet Office released Wednesday showed.

     But Motegi noted in a statement that the GDP marked the third straight

annual expansion in fiscal 2017 that ended in March, growing at 1.5% after +1.2%

in fiscal 2016.

     "There is no change to our view that the economy is recovering gradually,"

he said.

     "Looking ahead, amid overseas economic recovery and the effects of various

(domestic) policy measures, we expect employment and income conditions will

continue improving, and private demand, such as consumption and capital

investment, will lead the economic recovery," he said, repeating his comments

made three months ago at the time of Q4 GDP release.

     Private consumption, which accounts for about 60% of GDP, was flat with a

slight negative bias (-0.0%) on quarter in Q1, as expected, after a downwardly

revised +0.2% (+0.5 in the previous estimate) in Q4.

     Business investment unexpectedly fell 0.1% on quarter in Q1 (the median

forecast was +0.5%), the first q/q drop in six quarters after rising 0.6% in Q4.

But government and central bank officials believe demand for investing in

equipment remains solid amid labor shortages.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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