Japan's big growth streak just came to an end

Japan's big growth streak just came to an end

Japan's big growth streak just came to an end

Economists polled by Reuters last week had expected a contraction of 0.2%.

Export demand added 0.1% to first quarter GDP but the rate of growth is slowing.

On a seasonally adjusted annualized basis, GDP was down 0.6% - again missing forecasts for a decline of 0.1% following the downwardly revised 0.6% gain in the previous three months.

"The Japanese economy should see a modest recovery buoyed by the global economy, with exports in particular benefitting from this, helping Japan's GDP revert back to an uptrend from Q2 2018 onwards", he said in a commentary earlier this week. In the first quarter exports expanded by 0.6% after 2.2% growth in the previous quarter.

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The economy was dragged down by sluggish private consumption and capital expenditure.

Japanese government officials expect the decline to be temporary.

Capital investment was down 0.1 percent.

Given Japan's reliance on export-led growth, trade friction brought on by President Donald Trump's efforts to trim the perennial USA trade deficit has raised uncertainty over the outlook for the economy.

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Consumer spending fell marginally, registering a decline of less than one percentage point in the first quarter.

"The economy is unlikely to continue to contract further". The median estimate was for consumer spending to remain unchanged.

But SMBC Nikko Securities chief market economist Yoshimasa Maruyama warned that private consumption was weak even when the special factors were taken into consideration.

The first-quarter contraction could make Japanese politicians more reluctant to implement a hike in sales tax to 10 percent from the current 8 percent scheduled for next year.

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