Capital Economics: Japan's GDP growth is expected to stagnate this quarter

First quarter data shows that household spending and business investment both rose quarter-on-quarter. In addition, the surge in exports provided stronger growth momentum than the much smaller increase in imports. However, economist Marcel Thieliant noted that despite widespread discussion of loose fiscal policy under Japanese Prime Minister Sanae Takaichi, government consumption slowed quarter-on-quarter. This highlights that the supplementary budget announced last November has had no substantial impact on government spending. Meanwhile, consumer confidence has dropped sharply, and the fuel price cap can only keep inflation moderate for a limited time. He added that even with a new supplementary budget to fund gasoline subsidies, this would, at best, merely stabilize consumer spending.