Japan's economy in the April-June period grew an annualized 1.9 percent, upgraded from a preliminary 1.3 percent expansion as it reflected stronger capital investment in such fields as digitalization, government data showed Wednesday.

Real gross domestic product, the total value of goods and services produced in the country adjusted for inflation, rose 0.5 percent from the previous three-month period on a seasonally adjusted quarterly basis, according to the Cabinet Office.

The revised figure was slightly better than the average projection of 1.8 percent annualized growth by private-sector economists polled by Kyodo News.

However, the GDP increase fell far short of offsetting a revised 4.2 percent shrinkage on an annualized basis in the January-March period amid a resurgence of coronavirus infections.

An initially reported 1.7 percent increase in capital spending was improved to a 2.3 percent rise, given brisk business investments in the reporting quarter shown in Financial Ministry data released last week. A government official told reporters that business expenditures on digitalization have shown an upward trend.

Private consumption, which accounts for more than half of the country's GDP, was up 0.9 percent, slightly upgraded from a 0.8 percent growth. But spending on services remained sluggish as the government asked people to stay home and eateries to close early and not serve alcohol under a third state of emergency over the virus.

Facing a resurgence of virus infections, Tokyo and some other areas were under the virus emergency for nearly two months until the measure was lifted in late June except for the southern island prefecture of Okinawa.

Exports and imports expanded 2.8 percent and 5.0 percent, respectively, both downgraded by 0.1 percentage point from the preliminary figures.

Government spending rose 1.3 percent, sharply upgraded from a 0.5 percent increase, due to higher-than-expected medical care costs. A 1.5 percent decrease in public investment in the initial report was revised down to a 1.7 percent drop.

"It's good news that capital spending has begun to show bright signs, but the upward revision of GDP growth this time stops short of changing our recognition that the economic recovery is still slow," said Tomohiko Kozawa, a researcher at the Japan Research Institute.

Looking forward, many analysts including Kozawa predict Japan's economy to mark limited growth in the July-September period as the government issued a fourth virus emergency for the capital in mid-July, which was later expanded to wider areas.

The emergency now covers 21 out of Japan's 47 prefectures. Its current end date is set for next Sunday, but it will likely be put off by at least two weeks, although the number of daily new infection cases nationwide has started to fall recently.

"Given that about half of Japan's population has already been fully vaccinated, not only promoting inoculation but also easing restrictions on activities among vaccinated people matters for Japan's economy," Kozawa said, referring to a plan to use so-called vaccine passports for commercial purposes.

Nominal GDP, not adjusted for inflation, contracted 0.1 percent, or an annualized 0.5 percent, in the reporting quarter, revised down from a 0.2 percent annualized growth initially reported.

==Kyodo

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