MNI BRIEF: Japan Q1 GDP To Drop 0.2% Q/Q; Annualised -0.5%

Japan’s economy is expected to have shrunk in the January–March quarter for the first time in four quarters, as weak private consumption and falling net exports outweigh gains in capital investment, private economists predicted. 

Preliminary data forecast a 0.2% quarter-on-quarter GDP decline, or -0.5% annualised, reversing Q4’s 0.6% growth (2.2% annualised).

Private consumption, which accounts for 60% of GDP, is estimated to have edged up just 0.1%, while net exports likely contracted 0.6 percentage points after adding 0.7 pp to growth in Q4. 

The economists expect capital investment to have risen 0.8%, building on the previous quarter’s 0.6% gain, while public investment declined 0.3%.

Looking ahead, economists expect continued economic weakness in Q2, driven by sluggish exports and industrial output amid U.S. trade policy shifts, alongside soft consumption due to rising food prices. Business investment is also expected to remain subdued amid persistent uncertainty.

Japan's Cabinet Office will release preliminary Q1 GDP data at 0850 JST on May 16. (2350 GMT on Thursday, May 15).