Tokyo, May 20: Japan's economy shrank 4.0% in the first quarter, the biggest contraction on record, but economists see a return to modest growth in coming quarters for the world's No. 2 economy.
The world's second-largest economy contracted by 4.0 percent in the three months to March compared with the previous quarter, logging an annualised drop of 15.2 percent, the Cabinet Office said.
It was the worst performance in the post-World War II era, eclipsing an annualised fall of 13.1 percent seen in the first quarter of 1974, when the economy was reeling from a global oil shock.
Following are key points of the the preliminary data for gross domestic product, the broadest measure of the economy, including details from a briefing by a Cabinet Office official.
- The 4.0 % contraction in real GDP for the January-March quarter was the biggest on record. It was the fourth consecutive quarter of contraction, marking the longest run of declines.
- The previous quarter's revised 3.8% decline was the second biggest on record.
- The first quarter's 2.9% drop in nominal terms was also the biggest on record.
- Big declines in exports and domestic demand were to blame for the contraction, a Cabinet Office official said. Capital spending and private consumption logged bigger falls compared with the previous quarter.
- The drop in private consumption was led by falls in spending on cars, restaurant services, personal computers, hotels and transport. Consumers cut back spending because of worries over jobs and income, the official said.
- The 1.1% drop in private consumption was the biggest since April-June 1997 when spending shrank after an increase in the consumption tax.
- The 10.4% decline in capital spending was the biggest on record.
- The 26.0% fall in exports was the biggest on record. The drop was led by cars, electronic communication machinery, equipment for making semiconductors and cargo transport. Shipments to US and European markets fell more than they did in the previous quarter.
Bureau Report