Japan’s economy shrank slightly less than initially estimated in the first quarter as private consumption remained resilient in the face of a resurgence in Covid-19 infections and businesses rebuilt inventories, offsetting a drop in business spending.
While the slower contraction is good news for policymakers who expect the economy to return to growth this quarter, persistent supply chain disruptions remain a risk to economic momentum in the second quarter.
Revised gross domestic product (GDP) data released by the Cabinet Office on Wednesday showed Japan’s economy shrank 0.5% at an annualized rate between January and March.
It was a smaller drop than the preliminary reading of a 1.0% contraction released last month.
In the quarterly comparison, GDP lost 0.1%, beating market expectations for a drop of 0.3%.
Private consumption, which accounts for more than half of Japan’s GDP, rose 0.1% in the first quarter from the previous three months, compared with a previous reading of stability, thanks to a stronger contribution from mobile phone tariffs and sales of automobiles.
A rise in inventories also supported growth, in a sign that automakers and other manufacturers were looking for ways to deal with supply chain pressures, said Takumi Tsunoda, a senior economist at the Shinkin Central Bank Research Institute.
This helped offset a 0.7% drop in capital spending, but could indicate lower GDP growth in the current quarter as inventory growth cools.
Source: CNN Brasil
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