Japan’s economy has been experiencing a decline in the first quarter of the year, with both consumers and businesses cutting back on spending. The latest report from the Cabinet Office reveals that Gross Domestic Product (GDP) decreased at an annualized rate of 2% from January to March, larger than the 1.2% forecasted by economists. This downward trend in economic performance has been ongoing since last summer and presents a challenge for the central bank as it considers when to implement its next interest rate hike.
The decline in economic performance was due to several factors, including private consumption and capital spending decreasing during this period. Net exports also contributed to the economic slowdown. Despite these challenges, Japan’s economy has been stagnant since the spring of last year, with revised figures for the fourth quarter of 2023 showing a flat-lining economy after a slump during the summer months. This prolonged period of economic weakness in the country is a cause for concern and highlights the need for effective policies to stimulate growth and support businesses and consumers.
