Japan’s economy contracted in the first quarter, a revised estimate confirmed Monday, weakness that supports the Bank of Japan’s cautious stance and keeps political pressure on Prime Minister Shigeru Ishiba ahead of a key election.
Gross domestic product (GDP) shrank at an annualized pace of 0.2% in the three months through March, according to the Cabinet Office, a less severe drop than the initial estimate of a 0.7% decline. Economists had expected that initial figure to stand. The improvement was driven by better-than-expected inventory and consumption figures.
Inventories contributed 0.6 percentage points to growth, double the preliminary estimate, while personal consumption managed to eke out growth of 0.1%, versus a prior flat reading. The inventory gain is an indication of greater output, but also points to unsold goods and components, a potential sign of weak demand. Business spending gained 1.1%, a little weaker than first forecasts, while net exports, the main factor pushing the figures into the red, posted a drag of 0.8 percentage points.
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