MNI BRIEF: Japan Q1 GDP Posts 1st Contraction in 4 Qtrs

Japan’s economy contracted 0.2% q/q, or an annualised 0.7%, over the first quarter, marking the first decline in four quarters, driven by weak private consumption and a sharp rise in imports, preliminary Cabinet Office data showed Friday. 

The result was slightly weaker than the MNI median forecast of -0.2% q/q, or -0.5% annualised, but broadly aligned with the Bank of Japan’s expectations of a moderate recovery trend despite sluggish consumption.

BOJ officials are monitoring how exports perform from April onwards as the impact of U.S. tariffs begins to take hold. (See MNI POLICY: Spending Concerns Weigh On BOJ Hikes)

Private consumption, which makes up about 60% of GDP, was flat in Q1 after a revised 0.1% rise in Q4. Business investment rose 1.4%, extending gains for a fourth consecutive quarter.

Net exports dragged GDP down by 0.8 percentage points, after contributing 0.7 pp in Q4. Exports fell 0.6% in Q1, while imports surged 2.9%.

Private inventories contributed 0.3 pp to growth, while public investment dipped 0.4%, subtracting marginally from GDP.

Japan’s Q4 GDP growth was unrevised at +0.6% q/q, or 2.4% annualised.