Wednesday, 20 February, 2019

Japan's GDP ends best growth run in decades as spending, trade fade

Japan's economy expected to show sluggish growth in first quarter Japan's economy shrinks for first time in two years
Ginger Lawrence | 16 May, 2018, 09:31

"There were one-off special factors in the January-March period, ranging from stock market sell-offs to higher vegetable prices due to bad weather", said Takeshi Minami, chief economist at Norinchukin.

Economy Minister Toshimitsu Motegi said there was no change to the government's view that the economy was recovering moderately, predicting a resumption in growth to be driven mainly by private consumption and capital expenditure.

External demand - or exports minus imports - added just 0.1 percentage point to first-quarter GDP as imports slowed more than exports.

The economy was stalled by stagnant private consumption, which was flat in the January to March period after an uptick of 0.2 percent in the final quarter of past year. However, there are concerns that trade friction with the United States could affect demand for exports.

Economists polled by Reuters suggest Japan's economic growth has decreased by an annualised rate of 0.1% in the first quarter of 2018 after recording 1.6% growth in the final quarter of 2017.

Economists don't expect the period of contraction to last long.

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Exports rose 0.6 percent.

"There are worries about some emerging economy markets but the global economy as a whole is likely to continue its recovery for some more time".

The limp first-quarter performance was spread across different areas of the economy, according to Marcel Thieliant, senior Japan economist at research firm Capital Economics.

Maruyama of SMBC Nikko Securities. But with wage increases lagging inflation, consumer spending has remained flat, the latest data showed.

A sales tax hike to 5 percent from 3 percent in 2014 caused a large fall in consumer spending and tipped the economy into recession.