TOKYO (Reuters) - Japan's economy is expected to expand for a fifth straight quarter in January-March led by a recovery in consumer spending and solid offshore demand, a Reuters poll found, suggesting a firm trend in the making.
Analysts project the economy will continue to expand as exports rise, while capital spending is expected to recover reflecting strong corporate earnings and growing business confidence.
But the analysts noted that U.S. trade policy will be closely watched for developments as President Donald Trump's protectionist policies could hurt Japan's exporters.
The economy was expected to expand at an annualized rate of 1.7 percent in the first quarter, the fastest growth rate since a 2.2 percent rise in April-June 2016, the poll of 18 analysts showed.
The forecast figure would translate into 0.4 percent growth on a quarter-on-quarter basis following a revised 0.3 percent rise in the final quarter of last year.
"The economy in fiscal 2017 is expected to continue to pick up with a tailwind of such as the global economic recovery and a weak yen," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
"Uncertainty over the overseas political situation has eased but risks such as the prospects for the Chinese economy remain."
Private consumption, which accounts for roughly 60 percent of gross domestic product (GDP), was seen rising 0.4 percent in the first quarter, after it showed no growth in the October-December period.
Offshore demand - or exports minus imports - was expected to add 0.1 percentage point to growth, the third straight quarterly positive contribution to the economy, the poll showed.
Analysts say global recovery in the manufacturing sector is behind strong exports - especially in Japan's shipments to Asia.
Capital spending likely slipped 0.4 percent in the first quarter after a robust 2.0 percent gain the previous quarter, the poll found. But analysts believe, given upbeat business sentiment, that firms' willingness to invest has not diminished.
The Cabinet Office will announce the GDP data on May 18 at 8:50 a.m.(2350 GMT, May 17).
A separate Reuters' survey last month showed that confidence among Japanese manufacturers had risen for an eighth straight month to a level not seen since before the 2008 global financial crisis, reflecting output and export gains led by overseas economic recovery.
Key data next week include March core machinery orders, which are expected to show a 2.1 percent rise from the previous month, up for a second straight month.
The core orders, a highly volatile data series regarded as a good indicator of capital spending in the coming six to nine months, were seen rising 0.6 percent in March from a year ago following a 5.6 percent rise in February.
"Exports and factory output have been favorable helped by overseas economic recovery and a softer yen...Uncertainty over the Trump administration's trade policy raises worries, which makes firms cautious about capital spending," an analyst at SMBC Nikko Securities said in the survey.
The Cabinet Office will release machinery orders on May 17.
The Bank of Japan's corporate goods price index (CGPI) due on Monday, which measures the price companies charge each other for goods and services, was forecast to rise an annual 1.8 percent in April.
Reporting by Kaori Kaneko; Editing by Eric Meijer