Tokyo: Japan witnessed the highest growth in exports in over forty years. This comes as welcome news for Japan as this serves as a key indicator of capital spending grew, helping the world’s third-largest economy offset sluggish domestic demand as Covid-19 vaccinations boost business activity in key markets.

The rise in exports is largely attributed to a rebound in shipments from last year’s pandemic-driven plunge but was a welcome sign as the economy struggles to rebound from the first quarter’s shambolic numbers, amid a prolonged state of emergency caused due to COVID-19.

This data is likely to enforce the viewpoint that, Japan’s central bank will stick with its ultra-easy policy at its June 17^th-18^th policy meeting, although it may extend pandemic-relief programmes to support an already fragile economic recovery.

“We cannot count on private consumption, but an uptrend in exports and capital spending will help pick up the slack in the second quarter,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

Ministry of Finance data showed exports grew 49.6 per cent year-on-year in May, versus a 51.3-per cent increase expected by economists in a Reuter’s poll, led by US-bound car shipments.