Tokyo, June 4 (Bloomberg) -- Japan's economy probably grew last quarter for the first time in a year as exporters such as Honda Motor Co. sold more cars abroad and visitors flocked to Tokyo Disneyland. Gross domestic product probably grew 1.5 percent, seasonally adjusted, after shrinking for three quarters, according to the median of 43 forecasts in a Bloomberg News survey. The economy probably grew at an annual 6.7 percent pace in the first quarter, faster than any other Group of Seven country. Still, the world's second-largest economy may already be faltering. Companies such as Fujitsu Ltd. aren't investing in new equipment and assembly lines, and job cuts may undermine consumer spending, economists said. Business and consumer spending together account for about 70 percent of the economy. ``Recovery at this point is temporary and fragile,'' said Taro Saito, an economist at NLI Research Institute. ``The second-quarter GDP could even post a negative number.'' The first-quarter GDP report will be released Friday at 8:50 a.m. Japan time. The surge in exports might slow in the months ahead. Demand from the U.S., Japan's biggest export market, is likely to cool as growth slows from the 5.6 percent annual pace of the first quarter, economists said. Japan's exports grew at the slowest pace in four months in April. ``First-quarter growth came mostly from overseas demand,'' said Yasukazu Shimizu, a senior economist at Aozora Bank Ltd. ``We cannot expect an immediate boost in business or consumer spending anytime soon, keeping Japan's recovery a dull one.''

Exports Rise
Exports probably rose 6.7 percent in the first quarter from the previous three months, the biggest gain in 21 years, according to a Bloomberg News survey. Exporters such as automakers Toyota Motor Corp., Honda Motor Co. and Nissan Motors Co. all posted record-high earnings in the year ended March 31. Growing exports may be undermined by the strength of the yen, which has surged 5.9 percent against the dollar this year. To keep the yen from rising more, the government sold the currency three times since it hit a 5 1/2-month peak of 123.27 yen to the dollar on May 22. Consumer spending, which accounts for about 55 percent of the economy, probably rose 1.9 percent. People spent what they had saved for traveling and other entertainment in the first quarter after the Sept. 11 terrorist attacks, economists said. That helped more than double net income at Oriental Land Co. in the year ended March 31 as the number of visitors to Tokyo Disneyland and other theme parks jumped nearly 30 percent to 22 million.

Job Cuts
Still, consumers may start to cut back as Japanese manufacturers such as Hitachi Ltd. and Toshiba Corp. lay off tens of thousands of workers, seeking to trim costs and boost profits. Japan's economy lost 430,000 jobs in April. The number of people who gave up looking for work was even greater, keeping the unemployment rate at 5.2 percent -- short of December's record 5.5 percent. Economists say unemployment is likely to rise. Meanwhile, capital spending, which accounts for about 15 percent of the economy, probably fell 1.1 percent in the first quarter after a record 12 percent decline in the fourth quarter. That suggests the surge in business spending that fueled the recovery from the 1997-1999 recession won't be repeated this time around, economists said. Fujitsu, Japan's biggest maker of business computers, and Matsushita Electric Industrial Co., the world's biggest maker of consumer electronics, both slashed capital spending more than a fifth to cut costs after posting record losses in the year ended March 31.

Falling Prices
Some policy makers agree a recovery isn't assured. Bank of Japan Governor Masaru Hayami on Thursday said the economy wouldn't reach bottom until later this year. On Tuesday, Finance Minister Masajuro Shiokawa said first-quarter GDP will be ``tough'' and may force the government to reconsider its assessment that the economy had hit bottom. The Japanese government forecasts the economy will show no growth in the fiscal year ending March 31, while the International Monetary Fund expects it to shrink 1 percent in the year to December. Growth in the first quarter won't solve Japan's fundamental economic problems, which include falling prices, the developed world's largest public debt burden and a more than five-year slide in bank lending, economists say. ``The economy cannot grow in any meaningful way without an accommodating increase in domestic credit,'' said Carl Weinberg, chief economist at High Frequency Economics Ltd. in New York. Moody's Investors Service last week slashed Japan's credit rating by two notches to ``A2'' -- a notch below Botswana. Moody's said Prime Minister Junichiro Koizumi wasn't doing enough to get the economy to grow or cut the country's debt, which is set to rise to 140 percent of gross domestic product. Even if the economy grew 1.5 percent in the first quarter, as economists predict, it would still be smaller than it was in the fourth quarter of 1995 in nominal terms, which include the effects of falling prices. Two recessions since 1997 have whittled the world's No. 2 economy down to 500 trillion yen.