Japan economy beats expectations of slowdown

Japan's economy unexpectedly grew in the three months to March, shrugging off forecasts for a contraction in the world's third largest economy.

The economy grew at an annualised 2.1% in the period, preliminary gross domestic product (GDP) data showed.

That beat analyst expectations for a 0.2% contraction, as imports fell faster than exports.

The data were closely watched for any signals a planned sales tax rise could be delayed.

The surprise expansion in the official GDP figure was fuelled mostly by imports falling faster than exports.

Imports slid 4.6% - the biggest fall in a decade, according to Reuters - while exports dropped more than a 2.4%.

"The surprising resilience of the economy at the start of the year means that GDP growth will be stronger this year than we had anticipated," senior Japan economist at Capital Economics Marcel Thieliant said.

Mr Thieliant also said that following the better-than-expected growth figures Japan "will press ahead with the sales tax hike scheduled for 1 October".

Some policymakers have called for a delay to the sales tax increase from 8% to 10% given a backdrop of uncertain domestic and global economic conditions.

Prime Minister Shinzo Abe has already delayed the planned increase and uncertainties in the world economy - including slowing growth in China and its trade war with the US - have prompted some concern that it may be delayed again.

But the country's Economy Minister Toshimitsu Motegi appeared to indicate that the plans for higher sales tax remained on track.

"There's no change to our view that the fundamentals supporting domestic demand remain solid," Mr Motegi told reporters, according to Reuters.