Japan’s GDP growth rate beats expectations

The annualised growth rate of Japan’s economy in the first quarter of 2016 has surpassed expectations, growing at a rate of 1.7 per cent compared to the 0.3 per cent that was expected. This is likely to have eased pressure on Prime Minister Shinzo Abe, who was prepared to increase fiscal stimulus if the data was bad. However, this also means that bad news is not good news for the market that was expecting a poor reading to urge the Bank of Japan to begin additional easing measures. This has led to concerns that fresh stimulus may be delayed. Nonetheless, faster than expected growth whilst the Yen remains strong and with a slowdown in China suggests that Japanese consumption remains strong, despite weak levels of business investment. Japanese markets seesawed following the announcement which reflects the fact that the outlook for Japan remains uncertain, whilst the Yen weakened against the Dollar.