Japan first-quarter GDP growth expected to be paltry on soft consumer spending

Mon May 9, 2016 1:38am EDT
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By Kaori Kaneko

TOKYO (Reuters) - Japan's economy is expected to have barely grown in the first quarter, a Reuters poll showed on Monday, as stagnant consumer spending and wobbly financial markets keep expectations for more government stimulus measures alive.

Gross domestic product (GDP) was seen to have expanded at an annualized rate of 0.2 percent in January-March, according to the poll of 19 analysts, after a 1.1 percent contraction in October-December.

That would translate into a quarterly expansion of 0.1 percent, the poll showed, following a 0.3 percent decline in the final quarter last year.

Analysts say the slight growth was due to the extra day in the quarter from the leap year and that the economy may have even contracted without that factor.

"The GDP data will probably show the actual economy lacks strength," said Takumi Tsunoda, senior economist at Shinkin Central Bank.

"There are signs of a pickup in exports and corporations keeping firm capital spending plans, which support the economy, while private spending stays at a standstill."

The poll found private consumption, which accounts for roughly 60 percent of GDP, likely grew 0.2 percent in the first quarter after a 0.9 percent fall in the previous quarter.

Capital spending fell 0.8 percent after rising 1.5 percent and external demand contributed 0.1 of a percent point to growth in the first quarter, according to the poll.   Continued...

A shop clerk (2nd R) carries a box of shoes under sale signboards at a shoes retail store at a shopping district in Tokyo, Japan, April 28, 2015 file photo. REUTERS/Yuya Shino/Files