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6d ago

Japan's Economy Contracts 0.2% in Q1 as Export Struggles Deepen

Preliminary data shows Japan's first quarterly GDP decline in a year, driven by weak exports and stagnant private consumption.

FILE - A container ship is docked at a cargo terminal in Tokyo, on April 9, 2025. (AP Photo/Hiro Komae)
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Earlier this month the Bank of Japan revised down its growth forecasts

Overview

  • Japan's GDP shrank 0.2% quarter-on-quarter in Q1 2025, translating to a 0.7% annualized contraction, exceeding economists' expectations of a smaller decline.
  • Net exports reduced GDP growth by 0.8 percentage points, highlighting the impact of U.S. tariffs and global trade uncertainties on Japan's export-heavy economy.
  • Private consumption, accounting for over half of Japan's economic output, was flat during the quarter, failing to meet forecasts of modest growth.
  • Capital expenditure rose 1.4%, surpassing market expectations, but was insufficient to offset broader economic challenges.
  • The Bank of Japan maintained its policy rate at 0.5% earlier this month, citing inflation at 3.6% and ongoing risks from global demand shocks and trade tensions.