The growth data beat the average projection of 0.7 percent annualized growth by private-sector economists. However, the GDP rise was not enough to make up for the January-March quarter's 3.7-percent contraction.
Since Japan's vaccination rollout was slower than other major economies, the country's economic recovery, according to the latest data, showed a lack of momentum after its worst slump on record last year caused by the pandemic.
The economy of the United States and the euro area increased an annualized 6.5 percent and 8.3 percent in the same three-month period, correspondingly.
With a resurgence of COVID-19 infections, the Japanese government declared its third COVID-19 state of emergency in late April for Tokyo and three other western prefectures, and later expanded the emergency to 10 prefectures out of 47 total prefectures in Japan. It was lifted in late June for most prefectures.
Private consumptions were stressed by the third state of emergency, which asked establishments serving alcohol to suspend their operations and those not serving liquor to close early. In addition, people were requested to stay at home.
Consumer spending reached its first increase in two quarters, up 0.8 percent from the previous quarter. In the January-March period, spending reduced 1.0 percent amid the second COVID-19 emergency in major cities of Japan.
Exports increased by 2.9 percent, rising for the fourth straight quarter.
A government official told reporters that amid a global semiconductor shortage, car-related exports were not in full swing, but demand for chip-making equipment and other industrial machinery was solid with a strong recovery of the global economy.
At the same time, imports rose 5.1 percent, partly due to the government's procurement of COVID-19 vaccines.
Business and private residential investment, important domestic demand factors, grew 1.7 percent and 2.1 percent respectively, contributing to the reporting quarter's GDP growth.
"Postponed capital expenditure that many firms had initially planned in fiscal 2020 (through March) apparently began emerging this fiscal year," the official said, adding that digitalization and decarbonization-related investments are on the upward trend.
Government spending rose 0.5 percent, partly supported by the purchase of vaccines, and public investment fell 1.5 percent due to a decrease in costs to build infrastructure.
Due to the resurge in COVID-19 infection amid the spread of the highly contagious Delta variant, Tokyo entered the fourth state of emergency since mid-July.
The emergency measures also expanded to Okinawa, Osaka, and three prefectures near the capital, clouding the prospects of achieving high growth in the current July-September quarter.
Latest comments