Japan’s troubled economy grew at an annual pace of 2.7 percent during this year’s first quarter, according to revised government figures. The initial estimate was 1.6 percent.

The new number beat economists’ forecast of a 1.9-percent expansion.

Business investment also grew 1.4 percent during the quarter, indicating that companies have a positive view of the country’s economic future.

However, 0.4 percent of the “growth” was due to the value of businesses’ unsold inventory on hand, meaning that factories had made more goods than consumers were buying. As if in confirmation, consumer spending added a modest 0.5 percent during the period. Non-investment corporate spending was tepid and exports were off 0.3 percent.

Also, data from April found wages increased less than economists had predicted and workers lost purchasing power once inflation was factored in. Before long, shrinking real wages could curtail consumer spending notably.

TREND FORECAST: Japan’s economy still has not grown back to its pre-COVID War levels, and what is keeping it up are the negative interest rates that are artificially propping up the economy with cheap money. Yet, despite the cheap money flow, Japan’s economy has shrunk in four of the last nine quarters. 

Inflation rose in June while factory data registered a 1.6 percent drop in output from the previous month. Thus, while the Bank of Japan is expected to raise its inflation forecast, it will keep interest rates low and keep artificially stimulating the economy.