Japan Gdp Shrinks

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Japan Gdp Shrinks

Japan Q1 Gdp Shrinks On Slow Consumer Spending

The results for Q1 2024 are finally out, and it looks like the Japanese economy went through a contraction. The decline in the economy was driven by weak consumer spending as inflation remains high.

All of this is made even more complex with sluggish wages which has led to a decline in the Japanese economy during Q1 2024. At the same time, capital spending has also taken a hit, making things more difficult for the BoJ.

Overall, a 0.5% q/q decline was seen in the Japanese GDP during Q1 2024 (Jan-Feb-Mar), according to government data. According to forecasts, the economy was expected to decline by 0.3% only but the actual value ended up topping the charts.

Gdp Down By 2% During Q1 2024

look at the GDP on a y/y basis shows a decline of almost 2% during Q1. Once again, this figure was higher than the 1.5% contraction and the 0.4% growth during the last quarter.

Most of the weakness seen in the GDP figures is mainly driven by private consumption, which has also gone down by 0.7%. Once again, the experts were only forecasting a number around -0.2%.

According to economists, the data is a sign that Japan's major growth engines are now facing the side effects of high & consistent inflation. All of this made is made worse with an uncertain monetary policy outlook.

The wages will likely start to turn higher from Q2 2024 as a lot of labor unions have secured deals with the firms. However, it still remains to be seen exactly how much of it will translate into consumer spending.

As inflation remains sticky, the Japanese yen is also experiencing weakness. So, that's also a factor that weighed heavily on the Japanese GDP.

According to some experts, a weak economy has also raised doubts about how much the BoJ can move freely with its current policy of tightening.

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