Japan's big growth streak just came to an end

The slight decline at the beginning of the year came as a blow to the economic policies of Prime Minister Shinzo Abe, who is already under pressure over a series of scandals.

The economy shrank by 0.6 percent on an annualised basis, a much more severe contraction than the median estimate for an annualised 0.2 percent.

This brought to an end a series of eight consecutive quarters of growth, a winning streak not seen since the heady days of the "miracle" boom of the 1980s when the Japanese economy ruled the world.

Capital investment was down 0.1 percent.

"Globally, IT-related items have been in an adjustment phase, which weighed down Japan's exports and factory output", said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.

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But some economists believe the drop would be temporary.

The GDP deflator fell 0.2% on year, defying forecasts for a gain of 0.3% following the flat reading in the previous three months.

"The economy is unlikely to continue to contract further".

The Japanese economic system has been comparatively wholesome in latest quarters, selecting up from the doldrums that spanned earlier a long time, on extraordinarily free lending and a authorities program created to combat deflation - the continuous spiraling down of costs. "Real private-sector final consumption was down slightly (-0.0% q-q) and real exports slowed from +2.2% q-q in 2017 Q4 to +0.6% in 2018 Q1".

Growth for the previous quarter was also revised downward according to data released Wednesday that reflected weaker spending by consumers, businesses and the government. But with wage increases lagging inflation, consumer spending has remained flat, the latest data showed.

(Copyright © 2015. All Rights Reserved.)
 
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