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Japan's economy is expected to have contracted in the January-March period for the first time in three quarters damped by weaker private consumption amid the state of emergency and slowing capital investment, according to private sector economists.

While growth could rebound in the second quarter, they expect the recovery to be weak due to the ongoing pandemic.

Economists forecast preliminary Q1 GDP to shrink by 1.3% on quarter, or an annualized -5.0%. Forecasts ranged from -0.9% to -2.3% q/q, or -3.6% to -8.8% at an annualized pace. In the fourth quarter, the economy grew 2.8% q/q, or an annualized 11.7%.

The Cabinet Office will release preliminary GDP data for the January-March quarter at 0850JST on Tuesday, May 18 (2350 GMT on Monday, May 17).


Capex is expected to have slowed to 0.2% q/q following +4.3% in the fourth quarter. Forecasts ranged from -0.5% to +1.7%.

Private consumption, which accounts for about 60% of GDP, is expected to have fallen 2.1% q/q for the first drop in three quarters. Forecasts ranged from -1.6% to -3.3%.

Net exports of goods and services - exports minus imports - also weighed on the economy in the first quarter, reducing total domestic output by 0.2 percentage point. The category contributed 1.1 percentage points to output in the fourth quarter.

The average forecast for Q2 GDP growth is an annualised 5.63%, according to the latest monthly ESP Survey of 36 economists by the Japan Center for Economic Research conducted from March 29 to April 5.