TOKYO: Japan’s economy expanded at the fastest pace in a year in the first quarter, thanks in part to a leap year consumption boost, but analysts say the rebound is not strong enough to dispel concerns over a contraction this quarter.

With private consumption making only a feeble recovery from last quarter’s slump, the data keeps alive market expectations that Prime Minister Shinzo Abe will delay a scheduled sales tax hike next year, analysts said.

The world’s third-largest economy expanded by an annualised 1.7 per cent in January-March, much more than a median market forecast for a 0.2pc increase and rebounding from a 1.7pc contraction in the previous quarter, Cabinet Office data showed on Wednesday.

Analysts had worried that the January-March period would not produce enough growth to avert recession – defined as two straight quarters of contraction – after stripping out the estimated boost from the leap year.

“Taking into account the effects of the extra day from the leap year, which pushed up the quarter-on-quarter growth rate by 0.3 percentage point, growth is not as strong as the headline number shows,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

Abe said there was no change to his plan to proceed with the tax increase, unless Japan is hit by a huge earthquake or a shock of the scale of the collapse of Lehman Brothers in 2008.

Published in Dawn, May 19th, 2016