Japan economy rebounds in first quarter on firm consumption

TOKYO (Reuters) - Japan's economy grew 1.0 percent in January-March from the previous quarter, powering ahead of other major industrial nations thanks to rebuilding of the tsunami-battered northeast, solid private spending and recovering exports.

The expansion, roughly in line with a median market forecast of a 0.9 percent increase, followed a revised zero percent change in GDP in October-December, government data showed on Thursday.

The data did little to alter the dominant market view that the Bank of Japan is seen staying put next week after last month's monetary easing.

The rise in gross domestic product translates into annualized growth of 4.1 percent, stronger than 3.5 percent expected by analysts. It exceeds annualized growth of 2.2 percent growth in the United States in the same quarter and outperforms European heavyweights Germany, Britain, France and Italy.

Private consumption, which makes up about 60 percent of the GDP, rose 1.1 percent against the median market forecast of a 0.8 percent increase, helped by government subsidies for buyers of fuel-efficient cars.

A weaker yen and a pick-up in overseas demand also allowed exports to contribute 0.1 percentage point to Japan's growth in January-March.

Economists believe growth probably peaked last quarter and expect expansion to moderate to around 2 percent in the current fiscal year ending in March 2013, with the effect of the post-tsunami rebuilding seen fading in the second half of the year.

The government will consider upgrading its economic assessment in a monthly report for May, due out on Friday, the Asahi newspaper said.

(Additional reporting by Tetsushi Kajimoto and Kaori Kaneko; Editing by Tomasz Janowski and John Mair)