Published: Wed, May 16, 2018
Economy | By Shawn Conner

Japan GDP Slides In 1st Quarter Ending 8 Quarters Of Growth

Japan GDP Slides In 1st Quarter Ending 8 Quarters Of Growth

Japan's economy shrank at an annualized rate of 0.6 percent in the quarter through March, as private investment and public spending declined, according to Cabinet Office data released Wednesday.

Experts have predicted Japan's economic growth will be weaker this year than in 2017.

Given Japan's reliance on export-led growth, trade friction brought on by President Donald Trump's efforts to trim the perennial USA trade deficit has raised uncertainty over the outlook for the economy.

"There were one-off special factors in the January-March period, ranging from stock market sell-offs to higher vegetable prices due to bad weather", said Takeshi Minami, chief economist at Norinchukin.

The world's third-largest economy has slid into reverse for the first time in two years as a result of sluggish consumption and seasonal factors.

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"The economy maintains momentum towards recovery but exports are slowing as global growth seems to have peaked in the fourth quarter", said Ryutaro Kono, chief economist at BNP Paribas Securities.

TOKYO, May 16 (Reuters) - Japan's economy contracted more than expected at the start of this year, breaking the longest run of growth seen for decades, in a blow to Prime Minister Shinzo Abe's reflationary "Abenomics" polices.

Capital expenditure likely rose 0.4 percent, versus a 1 percent gain in the previous quarter, led by demand for factory automation and labor-saving technologies as companies tried to cope with a labor shortage.

A 0.2 percent contraction would translate into a flat quarter-on-quarter reading, a Reuters poll of 18 economists found.

Nominal GDP was down 0.4% on quarter, missing expectations for a gain of 0.1% following the 0.1% gain three months earlier.

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It was the first decline in nine quarters, snapping the longest stretch of continued expansion since the late 1980s.

"The economy is unlikely to continue to contract further".

However, a breakdown of the data shows export growth is losing momentum, expanding just 0.6 percent in the first quarter after growth of 2.2 percent October-December previous year. But with wage increases lagging inflation, consumer spending has remained flat, the latest data showed.

The economy was hit by stagnant private consumption, fresh data showed.

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