The Japanese economy contracted by 1.8% annually in the first quarter of this year, which was slightly better than the initial estimate of a 2.0% shrinkage, according to revised government data released on Monday.
The improvement was attributed to private sector investments, which declined by 0.4%, an improvement from the previous estimate of a 0.5% decrease.
Seasonally adjusted real gross domestic product (GDP), a measure of the value of a nation’s products and services, remained negative, as both exports and consumption decreased from the previous quarter.
On a quarter-to-quarter basis, the economy declined by 0.5% in the January-March period, according to the Cabinet Office, unchanged from last month’s results.
The annual rate measures what would have happened if the quarterly rate persisted for a year. Wage growth has been slow, and import prices have risen due to a decline in the value of the Japanese yen against the US dollar. The dollar is currently trading at nearly 157 yen, up from about 140 yen a year ago.
The weakened yen has led to a boom in tourism. However, it has also made imports more expensive, which is a concern for a nation that relies heavily on imported energy. Sluggish consumer spending has also weighed on the economy, as private consumption accounts for half of Japanese economic activity.
Another negative factor affecting the economy is the continuing scandal involving improper vehicle model tests at several major automakers, including Toyota Motor Corp., which are integral to Japan’s brand power. Production was halted on some models.
