Japan GDP contracts more than expected, clouds BoJ rate plans

16th May 2024 08:11

(Sharecast News) - Japan's economy unexpectedly shrank in the first quarter as consumers tightened their belts in response to stagnant wage growth, companies cut spending and exports fell.

Gross domestic product contracted 2% on an annualised basis in the three months to March 30, the Cabinet Office said on Thursday. The figure compare with a forecast contraction of 1.2% and now clouds the outlook for the Bank of Japan's plans to lift interest rates.

Growth was also hit by issues at car maker Toyota's subsidiary Daihatsu where the government ordered a total production shutdown because of faked safety test results and the New Year's Day earthquake near Tokyo in which more than 200 people died.

To compound the gloomy outlook, data for the fourth quarter of last year was revised down to show GDP was flat, making it nine months of no growth.

Reporting by Frank Prenesti for Sharecast.com