Bill Diviney, the senior economist at ABN AMRO, notes that Japan’s Q1 GDP surprised to the upside at 2.1% qoq annualized, well above consensus (-0.2%) and their (0.5%) expectations, but the details paint a far less rosy picture of the economy.

• Both private consumption and business fixed investment fell on the quarter, each subtracting 0.2pp from annualized growth. At the same time, the main positive contributions came from net exports (+1.5pp) and inventories (+0.6pp). However, exports actually plunged -9.4% on the quarter, and the only reason for the positive trade contribution is that imports fell at a much faster pace, by -17.2%.
• Similar to other regions, the strength in Q1 looks unsustainable. The story of unusual net export and/or inventory build contributions is consistent with what we have seen in some other advanced economies, notably the US and the UK, and suggests the current strength in global growth is unsustainable.