Japanese growth set to beat US

Japanese consumers are key to an ongoing recovery

Japan's economic growth forecasts have been revised upwards as the recovery gathers steam.

Bulging demand has pushed estimates to 6.1% for the full year, up from the previous estimate of 5.6%.

Gross Domestic Product (GDP) grew 1.5%, in real terms, in the first quarter up from the previous estimate of 1.4%.

Japan is the world's second biggest economy and now looks set to outstrip US growth of 4.4% annualised for the same period of January-March.

It is welcome news for Prime Minister Junichiro Koizumi, attending the G8 summit, as he faces another election in just a few weeks time.

Mr Koizumi returned to power with a majority government in November's general election and now faces upper-house elections in July, which could make or break his current second-term premiership.

Boost

A strong economy in Japan was also welcomed by President Bush attending the G8 summit.

Showering Mr Koizumi with praise Mr Bush said, "The first thing, of course, I will do is congratulate him on the fact that the Japanese economy is improving under his leadership."

In a meeting between the two leaders Mr Koizumi claimed the recovery in Japan was a result of his policy of "no growth without reforms".

His administration has made reforms at government agencies and urged the same at private-sector firms since Mr Koizumi took office three years ago.

China factor

The wider picture reveals that Japan also owes its change of fortune to booming export demand from China and other fast-growing countries in the region.

Recent industrial output figures showed a 3.3% rise in April compared to March and reinforced hopes that the recovery is sustainable.

Japan's economic growth hit a 13-year high in the last quarter of 2003.