Japan raises economic growth for Jan-Mar quarter to annualized 6.7 percent

Japan raised its estimate of January-March quarter economic growth Monday as investment by companies was stronger than first thought.

The government said the economy grew an annualized 6.7 percent in the quarter. The initial estimate was 5.9 percent growth.

Japan's economy, the world's third largest, is expected to contract in the current quarter due to a sales tax hike on April 1 that has sapped some momentum from consumer spending.

Retail sales and corporate spending both surged ahead of the 3 percentage point tax hike as families and businesses stepped up purchases to avoid paying the higher rate.

The higher growth estimate for the first quarter suggests corporate investment may be picking up and could help cushion the impact of the tax hike on the economy.

The revised data show private non-residential investment rose 7.6 percent in the first quarter from a year earlier, up from the original estimate of a 4.9 percent increase.

The government is planning to cut corporate taxes to further encourage investment that it says will lead eventually to higher wages, ending a two-decade slump following the collapse of Japan's "bubble economy" in the early 1990s.