Author: Tetsuji Kajimoto
TOKYO (Reuters) – Japan’s economy may shrink slightly more slowly than initially reported from January to March due to an upward revision in capital spending data, a Reuters poll showed on Friday, although risks continued to cloud the outlook.
Economists expect the economy to return to growth this quarter, helped by tax cuts and rising wages, but rising import costs due to a weak yen are expected to squeeze consumption, while production disruptions at some automakers may also have an impact.
Data released by the Cabinet Office on Monday is expected to show that the annualized contraction of gross domestic product (GDP) in the first quarter narrowed to 1.9%, slightly better than the 2.0% contraction first reported.
The revised data would imply a quarter-on-quarter contraction of 0.5%, unchanged from the initial reading.
Revised GDP data is expected to show first-quarter capital spending, a barometer of private demand, falling 0.7%, a slight revision from the initial 0.8% decline, becoming the main factor in the upward GDP revision.
Preliminary data showed that private consumption, which accounts for more than half of Japan’s economy, fell 0.7% in the first quarter as a weak yen led to higher living costs, squeezing household finances.
External demand (that is, exports minus imports) fell by 0.3 percentage points compared with the overall GDP data.
Separate data released by the Bank of Japan (BOJ) on June 12 is expected to show that the corporate commodity price index, which measures the prices companies charge each other for goods, may have risen 2.0% year-on-year in May and 0.4% month-on-month.
(This story has been resubmitted to fix a typo in the headline and to clarify that the data had been changed)
