Recovery hopes surge after Japan revises growth numbers

With the revision of its growth numbers for the first three months of the year, Japan has added to hopes of a recovery in the third-largest economy in the world.

Economic growth stood at 1 per cent between January and March, as against the previous three months, indicating an annualised growth of 4.1 per cent, according to the cabinet office.

This came as higher than the initial estimates of 0.9 per cent quarter-on-quarter growth.

The data come after a series of aggressive policy moves aimed at spurring growth in Japan's economy.

The upward revision in the growth numbers helped boost investor morale, with the Nikkei 225 index rising around 5 per cent.

Japan's major exporters, led the surge with shares in Toyota up 8.5 per cent and Sony rising nearly 7 per cent.

According to Martin Schulz of Fujitsu Research Institute who spoke to the BBC, the overall impact of the policy measures introduced by prime minister, Shinzo Abe and the Japanese central bank was now beginning to be felt.

Market sentiment was also lifted by the fall in the value of the yen.

The Japanese currency was trading close to 98.26 yen against the US dollar in Asia today, down from the 94.98 yen high of Friday.

Following the re-election of Abe in December last year, Japanese policymakers introduced a raft of measures aimed at reviving the Japanese economy after years of stagnation, which included a move by the central bank to double its inflation target.

Meanwhile, the upward revision to Japanese growth helped the country's Nikkei stock index surge today even as markets elsewhere remained solid after last week's better-than-expected US jobs data.

The Nikkei was up 4.9 per cent to 13,514.20 after the first-quarter growth rate of the world's number 3 economy increased from an annualised rate of 3.5 per cent to 4.1 per cent. The rise of the Nikkei more or less compensated for the retreat suffered by Japanese stocks last week, however,  the scale of the advance showed just how volatile the index had become.

After a rousing start to the year in first few months which saw the Nikkei up at five-year highs, the index had become increasingly volatile losing over 6 per cent of its value last week. Investors were mainly concerned whether the big monetary stimulus announced this year by the Bank of Japan to get the country out of its two-decade stagnation would work.

According to commentators, though investors had grown increasingly cautious of late, the growth figures, though backward-looking, held a measure for some comfort ahead of tomorrow's policy statement from the BoJ.