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Japanese economy shrinks in Q1 marking 1st since 2015

May 16, 2018 10:36 AM
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Mubasher: The Japanese economy shrunk in the period between January and March 2018 on the back of weak private consumption and business investment, marking the first contraction since the fourth quarter of 2015 and halting the country's longest growth streak in 28 years, government data indicated.

The Japanese economy shrank at an annualised rate of 0.6% in the first three months of the year, following revised 0.6% growth in the final quarter of 2017. The contraction was the first since the final quarter of 2015.

Economists had forecast real gross domestic product (GDP) to drop by 0.1% on an annualised basis, according to a poll by Nikkei Quick.

The world's third-largest economy contracted by 0.2% on quarter, which was worse than economists' projections of a flat reading.

Private consumption, which makes up around 60% of GDP, was stable in Q1-18. The first two months of the year witnessed heavy snowfall prompting people to stay at home, while higher fresh-food and energy prices made consumers unwilling to spend. Capital expenditure fell 0.1% in Q1-18, the data indicated.

"The contraction came as the Japanese economy seemed to have finally escaped from decades of stagnation, helped by economic policies including the Bank of Japan's aggressive monetary easing," according to MarketWatch.


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