Japan's GDP contracted in Q1 on weak domestic demand — Reuters poll

According to a Reuters poll, Japan's GDP likely contracted in the first quarter due to weak domestic demand and a surge in imports. Respondents expected the country's economy to slow by 0.2% on a year-on-year basis. This could mark the first decline in a year, following 2.2% growth in the previous quarter, as noted by the agency. Official GDP data will be released on May 16.

Private consumption, which accounts for more than half of Japan's GDP, probably increased by just 0.1% due to the surging cost of food. Capital spending is forecast to have risen by 0.8%, driven by strong corporate earnings, the agency said. However, net exports likely reduced GDP by 0.6% as imports exceeded exports. Meanwhile, exports posted their fourth consecutive quarter of growth, driven by shipments ahead of the imposition of the US tariffs.

As Reuters recalled, in early May, the Bank of Japan kept interest rates unchanged and lowered its economic growth forecasts amid global uncertainty. The financial regulator also intends to pursue a cautious monetary policy, the agency's experts note.