In fact, higher consumer confidence accredited to the new policy measures is boosting personal consumption. Although earnings have not risen, household expenditures accelerated by 5.2 percent yoy in March after increasing 0.8 percent in February. In addition, in Q1 of 2013, exports grew 3.8 percent from the previous quarter even given the weak global demand. Yet, concerns still remain. So far, initiated in April the new program of quantitative monetary easing focusing on achieving the 2 percent inflation target in two years by doubling the monetary base has led to the yen depreciation. And although the stock market rallied and the profits of big corporations increased, the deflationary price trend persists. In addition, the labor market has improved gradually and the unemployment rate fell to 4.1 percent in March from 4.3 percent in February. However, the government decided to postpone significant reforms in the labor market. Japan’s life time employment system and the high protection of permanent workers limits the flexibility and potential of young workers. Also, in the last few months, there has been no visible improvement in wages. Without rising salaries it is almost impossible to keep consumption growth and expect the prices to go up. On the negative side, in spite of stock rally and exports rise, business confidence is still very low. As such, investment on new plant and equipment fell for the fifth straight quarter in the three months to March.

After two quarters of contraction, the GDP expanded 0.3 percent in Q4 of 2012 and 0.9 percent in Q1 of 2013. In the first four months of 2013, the consumer confidence has been at the highest level since 2007.		The Tankan index of sentiment at large manufacturers improved slightly in the first quarter. Yet, industrial production recovery still seems to be out of reach as it declined 6.7 percent yoy in March.
In March, exports rose 1.1 percent yoy to 6.271 trillion yen, after dipping 2.9 percent in the previous month. Japan's trade deficit more than quadrupled yoy as a weaker yen inflated import costs.		In April, the Bank of Japan announced further measures to fight systemic deflationary pressures. Still, the overall price trend remained deflationary.