GDP forecast to have dropped in Jan.-March

May 1, 2018

Tokyo- Think tanks expect Japan's gross domestic product to have contracted for the first time in two years in January-March, mainly reflecting sluggish personal consumption due to higher vegetable prices.

Eleven economic research institutes on average estimate the country's real GDP for the quarter to have shrunk at an annualized rate of 0.1 percent from the previous three months.

Japan's real GDP increased for eight consecutive quarters through October-December last year. The Cabinet Office is scheduled to announce a preliminary GDP report for January-March on May 16.

Many economists and analysts expect weak personal spending for January-March, pointing to higher vegetable prices and heavy snow that forced many people to stay home.

"Lower stock prices also cooled consumer sentiment," said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co.

Many experts agree that housing investment declined in the quarter after investment demand for housing for rent to save inheritance tax payments hit a peak.

"IT (information technology)-related demand has slowed down" in terms of exports, said Yusuke Ichikawa, senior economist of the Mizuho Research Institute.

Meanwhile, many economists and analysts agree that capital spending continued to be robust thanks mainly to labor-saving investment by businesses.

On the future outlook, Yoshiki Shinke, chief economist at the Dai-chi Life Research Institute, said the economic recovery led by businesses has not ended.

Shinke predicted that the Japanese economy will pick up in April-June thanks to the solid world economy led by the United States.

By contrast, Taro Saito, director of economic research at the NLI Research Institute, is wary about a possible economic slowdown, citing concerns over negative effects of U.S.-China trade friction. Jiji Press