It hasn’t been a great couple of decades for Japan, which has suffered from persistent stagnation and deflation as China, its bitter regional rival, leapfrogged it to become the world’s second-largest economy. Japan still has plenty of problems, but prime minister Shinzo Abe should be cheered by the fact that Japan’s GDP growth—calculated on a quarter-on-quarter annualized basis*—narrowly edged out China’s in the first quarter, 5.9% to 5.72%.
As noted by Bloomberg’s Tom Orlik, Japan’s momentary advantage is unlikely to last. Japan’s quarterly GDP was artificially juiced by consumers rushing to make purchases ahead of a major sales tax increase. That will almost certainly create a hangover in the second-quarter, because some big purchases were shifted forward and the tax is expected to crimp consumer spending going forward.
But for now, the practitioners of Abenomics can pause and enjoy the moment.
*As the Wall Street Journal helpfully explains (paywall), the ”adjusted quarter-on-quarter calculation is a reflection of the current momentum of the economy, a comparison of today with yesterday.”