Japan's economy contracts by 2% in Q1, slightly better than expected

Posted on June 17, 2024   |  

Japan's economy shrank by 1.8% annually in the first quarter, which was slightly better than the initial forecast of a 2.0% contraction.

Private sector investments improved to minus 0.4%, up from the previous estimate of minus 0.5%.

Despite this improvement, the seasonally adjusted real gross domestic product (GDP) remained negative due to declines in exports and consumption compared to the previous quarter.

Quarter-to-quarter, the economy saw a 0.5% decline in the January-March period, which was unchanged from the previous month.

Slow wage growth and increased import prices, influenced by a weakened Japanese yen against the US dollar, have impacted the economy.

However, unemployment remains relatively low at around 2.6%, although Japan faces a serious labor shortage due to a declining birth rate.

Japan's GDP is expected to fall to the fifth position globally in the coming year, following the US, China, Germany, and India.