Japan's First-Quarter Economic Contraction Worse Than Forecast - Ester Holdings

Japan’s First-Quarter Economic Contraction Worse Than Forecast

Bloomderg.com — Japan’s economy has moved past a rough stretch that ended a two-year run of growth, with forecasts pointing to renewed expansion as global demand regains traction.

Gross domestic product shrank 0.6 percent on an annualized basis in the first quarter, according to revised data released on Friday, as a weaker reading of private consumption offset a stronger one for capital investment. That missed the median forecast of economists. […]

Private consumption remains soft — and an obstacle to the Bank of Japan’s goal of generating 2 percent inflation. It fell 0.1 percent during the first quarter, the revised data showed on Friday, but that was the result of an upward revision to the fourth-quarter figure to growth of 0.3 percent.

Export growth, capital investment and the tightest labor market in decades have yet to turn into the kind of robust wage gains and consumer spending that could fuel 2 percent inflation. […]

Capital investment has been on the rise for more than a year, but at a slow pace. The first-quarter result was revised higher to an increase of 0.3 percent, up from a preliminary reading of -0.1 percent.

While economic growth is poised to resume, it is expected to be slower than the 1.7 percent achieved in 2017. And the reliance on external demand will leave Japan vulnerable at a time of escalating trade battles. […]

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