Private economic research institutes and financial institutions expect Japan’s economy in the April-June period to show a contraction of around 1 percent in real terms from the previous quarter, marking the first shrinkage in three quarters, according to forecasts released by Monday.

Twenty-five private economic research institutes and financial institutions predict an average contraction for the first quarter of fiscal 2001 of 0.9 percent in GDP — the output of goods and services minus foreign income — from the preceding quarter for an annualized shrinkage of 3.6 percent.

The government will announce preliminary GDP data for the April-June quarter on Sept. 7.

The Japan Research Institute forecasts GDP figures close to the average on the assumption that personal consumption will decrease 0.7 percent from the January-March period, marking the first decline in two quarters, in light of increased uncertainty about employment and income.

Corporate capital spending is estimated to have dropped 2.2 percent, which would be a second consecutive quarter-to-quarter fall, according to the institute, which also predicts a substantial decrease of 7.3 percent in housing investment.

Japan’s economy needs to grow 0.5 percent in July-September in order to post growth in fiscal 2001, the institute said.

But most forecasters said that the nation’s GDP will contract in the year due to the unexpectedly long-lasting slump in the information technology industry, a cut in public works pending as part of the government’s structural reform programs, and a decrease in domestic manufacturing operations caused by an increase in low-priced imports from other Asian economies.

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