MNI: Japan Q1 GDP Posts First Contraction In Two Quarters

Japan's economy in Q1 posted its first contraction in two quarters following weak private consumption and capital investment, preliminary GDP data released by the Cabinet Office Thursday showed.

Q1 GDP fell 0.5% q/q, or an annualised 2.0%, more than the expected 1.2% drop, following a revised +0.0% q/q, or an annualised revised 0.0% for Q4 2023.

Bank of Japan officials had expected the economy to have fallen in Q1 due to weak production and consumption driven by the suspension of automobiles and high prices. They predict the economy will gradually recover in or after Q2 as automakers resume production and wage-hike hopes buoy households.

Q4 growth was weaker than the MNI median forecast that pointed to a fall of 0.4% q/q, or an annualised 1.6% drop.

Private consumption, which accounts for about 60% of Japan's GDP, fell 0.7% q/q in Q1 for the fourth straight drop, after a revised 0.4% fall in Q4.

Business fixed investment fell 0.8% q/q in Q1 for the first drop in two quarters following a revised 1.8% rise in Q4.

Net exports of goods and services made a negative 0.3 percentage point contribution to total domestic output after pushing Q4 GDP growth up 0.2 pp.

Exports fell 5.0% on quarter in Q1 after rising 2.8% q/q in Q4. Imports fell 3.4% in Q1 after rising 1.8% in the previous quarter.

Private-sector inventories contributed a positive 0.2 pp to Q1 GDP following +0.2 percentage point in Q4, while public investment rose 3.1% on quarter, contributing 0.2 pp to GDP.

Japan’s GDP for the fourth quarter was revised to 0.0% q/q, or an annualized 0.0% from +0.1% q/q, or an annualised +0.4%.