{"id":116027,"date":"2021-06-08T06:37:04","date_gmt":"2021-06-08T06:37:04","guid":{"rendered":"https:\/\/fin2me.com\/?p=116027"},"modified":"2021-06-08T06:37:04","modified_gmt":"2021-06-08T06:37:04","slug":"japan-upgrades-q1-gdp-on-smaller-hit-to-domestic-demand","status":"publish","type":"post","link":"https:\/\/fin2me.com\/business\/japan-upgrades-q1-gdp-on-smaller-hit-to-domestic-demand\/","title":{"rendered":"Japan upgrades Q1 GDP on smaller hit to domestic demand"},"content":{"rendered":"

TOKYO (Reuters) -Japan\u2019s economy shrank less than initially reported in the first quarter on smaller cuts to plant and equipment spending, but the coronavirus pandemic still dealt a huge blow to overall demand.<\/p>

FILE PHOTO: A shopper wearing a protective mask pushes a shopping cart at Japan’s supermarket group Aeon’s shopping mall as the mall reopens amid the coronavirus disease (COVID-19) outbreak in Chiba, Japan May 28, 2020. REUTERS\/Kim Kyung-Hoon<\/figcaption>

Separate data showed growth in bank lending slowed sharply in May, while real wages posted the biggest monthly jump in more than a decade in April, in signs that the world\u2019s third-largest economy was gradually overcoming last year\u2019s pandemic hit.<\/p>\n

Among the mixed indicators are some reassuring signs for policymakers, who are worried Japan\u2019s recovery will lag major economies that have rolled out COVID-19 vaccines much quicker and are able to reopen faster.<\/p>\n

The economy shrank by an annualised 3.9% in January-March, not as bad as the preliminary reading of a 5.1% contraction, but still posting the first fall in three quarters, Cabinet Office data showed Tuesday.<\/p>\n

The reading, which beat economists\u2019 forecast for a 4.8% decline, equals a real quarter-on-quarter contraction of 1.0% from the prior quarter, versus a preliminary 1.3% drop.<\/p>\n

The revised gross domestic product (GDP) decline was mainly due to a smaller fall in public and capital spending, which both eased less than initially thought, offsetting a slightly larger fall in private consumption.<\/p>\n

\u201cOverall, capital spending and private consumption remained weak, which showed weakness in domestic demand,\u201d said Takeshi Minami, chief economist at Norinchukin Research Institute.<\/p>\n

\u201cThe vaccine issue is the most important thing for the (economic) recovery,\u201d he said, adding that the vaccination rate would need to come to about 50% to boost economic recovery prospects.<\/p>\n

Capital spending shrank 1.2% from the prior quarter, better than a preliminary 1.4% decrease, and matching the median forecast for a 1.2% loss. Government consumption fell 1.1%, a smaller drop than a preliminary 1.8% decline.<\/p>\n

Private consumption, which makes up more than half of gross domestic product, dropped 1.5% from the previous three months, worse than the initial estimate of an 1.4% drop.<\/p>\n

However, Economy Minister Yasutoshi Nishimura said spending could recover as consumers return to the streets.<\/p>\n

\u201cIf infections subside, there\u2019ll be pent-up demand from not having been able to go eating out or travelling,\u201d Nishimura told reporters after the release of the data.<\/p>\n

PANDEMIC IMPACT<\/h2>\n

Net exports – or exports minus imports – subtracted 0.2 percentage point from growth, while the hit to domestic demand pulled it down by 0.8 percentage point, not as bad as a preliminary contribution of minus 1.1 percentage point.<\/p>\n

The better-than-expected revision comes after household spending and exports jumped in April, though the gains were inflated largely by the comparison to last year\u2019s deep pandemic-driven plunge.<\/p>\n

Total lending by Japan\u2019s banks grew 2.9% in May from a year earlier, slowing at a record pace from a 4.8% increase in April, Bank of Japan data showed on Tuesday.<\/p>\n

Inflation-adjusted wages, a barometer of household purchasing power, rose 2.1% in April on a year-on-year basis, the government said.<\/p>\n

The bank lending slowdown was due largely to the base effect of a COVID-driven surge last year, while a drop in consumer prices and rebounds in overtime pay and compensation for part-time workers helped lift wages.<\/p>\n

Separately, Japan\u2019s service sector index, based on a survey of workers such as taxi drivers, hotel workers and restaurant staff, fell one point from April to 38.1 in May, down for a second straight month, a Cabinet Office survey showed.<\/p>\n

The government has come under political pressure to water down an already stretched fiscal target this year as the cost to combat the health crisis accumulates.<\/p>\n

Some analysts expect Japan\u2019s economy will contract again in the current quarter – pushing it back into a technical recession – as an extension of coronavirus emergency curbs for Tokyo and other major areas hurts domestic demand.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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