MNI DATA BRIEF: Japan Q1 GDP Posts 1st Contraction In 3 Qtrs

Japan's economy posted the first contraction in three quarters for the January-March period in the wake of weaker private consumption and slowing capital investment, according to preliminary GDP data released on Tuesday by the Cabinet Office.

Q1 GDP fell 1.3% q/q, or an annualized -5.1% following an unrevised 2.8% q/q, or an annualized revised 11.6% for the fourth quarter of 2020.

The Q1 growth was largely in line with the MNI median forecast that pointed to a fall of 1.3% q/q, or an annualized -5.0%.

The key points from the latest GDP data:

--Private consumption, which accounts for about 60% of Japan's GDP, fell 1.4% q/q in Q1, after an unrevised 2.2% rise in Q4. The median forecast was for a 2.1% q/q fall.

--Business investment fell 1.4% q/q in Q1, the first drop in two quarters following +4.3% in Q4. The median forecast was for a 0.2% rise.

--Net exports of goods and services -- exports minus imports -- made a negative 0.2 percentage point contribution to total domestic output, the first negative contribution in three quarters after pushing Q4 GDP growth up by 1.0 percentage point.

--Exports rose 2.3% on quarter in Q1 after rising 11.7% in Q4. Imports rose 4.0% after rising 4.8% in the previous quarter.

--Private-sector inventories contributed a positive 0.3 percentage points to Q1 GDP following -0.5 percentage points in Q4, while public investment fell 1.1% on quarter, contributing -0.1 pp to GDP.