Japanese business confidence worsened for the first time in nearly two years in the first quarter, a central bank survey showed, as companies took a hit from supply disruptions and surging raw material costs caused by the Ukraine crisis.

Companies expect conditions to worsen further three months ahead as rising input costs squeeze margins, the Bank of Japan’s closely-watched tankan survey showed on Friday, heightening the chance the bank will slash its growth forecast in a quarterly review scheduled later this month.

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