Japan's economy shrinks in Q1, ends 2-year run of growth

Japan’s economy expected to show sluggish growth in first quarter

Japan’s economy expected to show sluggish growth in first quarter

Tokyo stocks opened lower Wednesday following Wall Street's overnight decline and on reports just before the opening bell that Japan's economy shrunk at an annualized rate of 0.6 percent in the January-March quarter.

The Japanese economy shrunk in early 2018, recording its first quarterly contraction since late 2015.

Capital expenditure fell 0.1 percent, down for the first time in six quarters, suggesting corporate investment is not as strong as many economists had forecast.

The economists polled by Reuters were expecting a 0.2 percent contraction following a downwardly revised 0.6 percent annualized rate of expansion in the fourth quarter. However, there are concerns that trade friction with the United States could affect demand for exports.

GDP is expected to be flat on quarter and slip 0.1% on year after adding 0.4% on quarter and 1.6% on year in the three months prior.


Private consumption, the largest part of the Japanese economy, was unchanged, a result that was in line with market expectations.

"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.

"The economy is unlikely to continue to contract further. The global economy is performing well and a yen is trading beyond 110 yen against the dollar, so once exports start to grow again, the economy will return to a moderate growth path".

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

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