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Japan's GDP in Q1 grows, employee income down

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Staff writer ▼ | May 16, 2014
JapanJapan's gross domestic product jumped 5.9 percent year on year in the first quarter of 2014, posting its biggest expansion since the third quarter of 2011, the Japanese government said.

The data, with the inflation factors deducted, was up 1.5 percent from October-December period, up for the sixth straight quarter, the Cabinet Office said in a preliminary report, owing it to a rush in demand ahead of an April 1 sales tax hike.

Consumption, which accounts for about 60 percent of Japan's GDP, increased a real 2.1 percent on quarterly basis, its fastest growth since Q1 of 1997. The country's exports also saw a sharp gain, which was up a real 6.0 percent due partly to increase in auto exports, compared with a 0.5 percent climb in the previous quarter.

Imports were up 6.3 percent due to a rise in demand for natural resources as well as electrical appliances such as mobile phones, according to a government official.

Though the GDP posted big surge in the reporting period, employee's income was down on the contrary. It lost 0.7 percent in real terms on year in Q1, according to the report.

Once the effect of the three-percentage-point sales tax is taken into account, real employee income is likely to be even smaller in Q2, posing serious risks to personal spending growth, experts say.

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