Japan's GDP Growth is Likely to Slow in Q1

Forex News

According to analysts, the longest economic growth in Japan since the 1980s, which is expected to stop in the first quarter, should restore some momentum within a year. The Japanese economy, the third largest in the world, has grown eight consecutive quarters before the end of 2017, which is the longest continuation since the 1980s.

The economy was seen growing at an annualized rate of 0.5% in the first quarter as consumer spending and factory output weakened. Economists predicted that the economy will expand 1.3% over the fiscal year that started in April, down from the expected 1.8% for the fiscal year just ended in March. Despite a solid economy, consumer prices have been slow to recover and inflation remains well below the Bank of Japan's 2% target.

It is also awaited, that the Core CPI, which includes oil products but excludes fresh food, will rise to 0.9% this fiscal year and 1.0% for fiscal 2019, excluding the impact on price growth from a scheduled sales tax hike next October.

Slowdown of the Japan’s economic growth will probably again push back the timing of when Bank of Japan expects to reach its inflation target, due partly to the yen's strength. The Bank currently sees it achieving that goal around fiscal 2019.