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--Japan Q1 Real GDP -0.2 Q/Q; MNI Median Unchanged
--Japan Q1 Real GDP -0.6% Annualized; Median Unchanged
--Japan Q1 GDP Posts 1st Q/Q Drop in 9 Quarters
--Japan Q1 Domestic Demand Contribution -0.2 Pct Point
--Japan Q1 Net Export Contribution +0.1 Pct Point
--Japan Q1 Consumption -0.0% Q/Q, -0.0 Point Contribution
--Japan Q1 Capex -0.1% Q/Q, -0.0 Point Contribution
--Japan Q1 Private Inventory Contribution -0.1 Pct Point
--Japan Q1 Public Investment +0.0% Q/Q, +0.0 Point Contribution
--Japan Q4 Real GDP +0.1% Q/Q, Revised Down From +0.4%
--Japan Q4 Real GDP +0.6% Annualized, Revised From +1.6%
--Japan Q1 Deflator +0.5% Y/Y Vs Q4 +0.1%
--Japan Q1 Domestic Demand Deflator +0.9% Y/Y; Q4 +0.6
     TOKYO (MNI) - Japan's modest economic recovery took a breather in the first
quarter of 2018 as the severe winter weather and high fresh food and fuel prices
hurt consumption, mitigating the positive effect of a slight gain in net
exports, data from the Cabinet Office showed Wednesday.
     The real gross domestic product (GDP) fell 0.2% on quarter, or an
annualized 0.6% in Q1.
     It was the first contraction in nine quarters, since Q4 of 2015, when it
shrank 0.3% on quarter, or 1.2% on an annualized basis, hit by sluggish consumer
spending amid a slow wage recovery and uncertain growth prospects at the time.
     The MNI median forecast for Q1 GDP was flat both on quarter and at an
annualized pace, based on projections by nine economists, which ranged from
-0.2% to +0.1% on quarter, or an annualized -0.9% to +0.5%.
     In the final quarter of 2017, the GDP grew a downwardly revised 0.1% on
quarter (+0.4% estimated earlier), or an annualized +0.6% (revised from +1.6%),
as a rebound in consumer spending and continued solid capital investment offset
weak net exports and public works spending.
     The key points from the preliminary Q1 GDP data.
     * Private consumption, which accounts for about 60% of GDP, was flat with a
slight negative bias (-0.0%) on quarter in Q1 after a downwardly revised +0.2%
(+0.5 in the previous estimate) in Q4. The median forecast was unchanged on
quarter, ranging from -0.2% to +0.2%.
     * Business investment unexpectedly fell 0.1% on quarter in Q1 (the median
forecast was +0.5%), the first q/q drop in six quarters after rising 0.6% in Q4.
But government and central bank officials believe demand for investing in
equipment remains solid amid labor shortages.
     * Net exports of goods and services -- exports minus imports -- made a
positive 0.1 percentage point contribution to total domestic output (the median
forecast was +0.0 percentage point). It was the first positive contribution in
two quarters after it pushed down Q4 GDP growth by 0.1 percentage point.
     * Exports rose 0.6% on quarter in Q1 for the third straight rise after
rising 2.2% in Q4 while imports gained at a slower pace of 0.3% after rising
3.1% in the previous quarter.
     * Private-sector inventories pushed down Q1 GDP by 0.1 percentage point
(vs. the median forecast of -0.1% point) following +0.1 percentage point in Q4.
     * Public investment was unchanged (+0.0%) on quarter, making zero
contribution to GDP.
     Going forward, economists expect Japan's economic growth to return to an
above-potential rate of over 1% annualized in the second quarter and stay around
that level until it moves up to 2% in Q3 of 2019, just before the sales tax hike
to 10% from 8% planned for October 2019.
     The average economist forecast for Q2 GDP growth is an annualized 1.36%,
according to the latest monthly ESP Forecast Survey of 40 economists by the
Japan Center for Economic Research conducted from April 26 to May 7.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:
[TOPICS: MAJDS$,M$A$$$,M$J$$$,MT$$$$]