Japan economy shrinks after two years of growth

- AGENCE FRANCE-PRESSE, TOKYO

May 17, 2018-

Japan’s economy slid into reverse for the first time in two years at the beginning of the year, hit by sluggish consumption and a winter cold snap, but analysts predicted the world’s third-largest economy would quickly rebound.

The economy contracted by 0.2 percent quarter-on-quarter in the January-March period, compared with growth of 0.1 percent at the end of 2017, the Cabinet Office said Wednesday.

This brought to an end a series of eight consecutive quarters of growth, a winning streak not seen since the heady days of the “miracle” boom of the 1980s when the Japanese economy ruled the world.

The data will come as a blow for the vaunted “Abenomics” policies of Prime Minister Shinzo Abe, who is already under pressure over a series of scandals. But experts said they expected a pause in the growth trend rather than a prolonged downswing.

“There were one-off special factors in the January-March period, ranging from stock market sell-offs to higher vegetable prices due to bad weather,” said Takeshi Minami, chief economist at Norinchukin.

The yen also strengthened against other major currencies on safe-haven buying, clouding the

prospects for Japanese exporters.

“There are worries about some emerging economy markets but the global economy as a whole is likely to continue its recovery for some more time. (Japan’s) GDP will likely come back to positive growth in April-June,” Minami told AFP.

The economy was stalled by stagnant private consumption, which was flat in the January to March period.

Published: 17-05-2018 08:03

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