Gold prices edge lower as Trump downplays Powell firing fears, dollar firms
Investing.com-- Japan’s economy contracted slightly less than initially estimated in the first quarter amid stagnant consumer spending and falling exports due to tariff-induced trade woes.
Gross domestic product fell 0.2% year-on-year in the three months to March 31, better than preliminary estimates of a 0.7% drop, government data showed on Monday. However, the reading marked a sharp reversal from the 2.4% growth recorded in the previous quarter.
Quarter-on-quarter GDP growth was flat, compared to an initial estimate of 0.2% contraction.
The slightly better-than-expected GDP print was driven chiefly by the private consumption being revised upward to show 0.1% q-o-q growth, compared to earlier estimates of a flat reading.
However, growth in capital expenditures was revised down to 1.1% q-o-q from 1.4%. External demand fell 0.8%, in line with the initial forecast.
The reading pointed to weakness in Japanese exports during the quarter, amid uncertainty over U.S. trade tariffs and weakening demand in major markets such as China.
Although trade talks between Japan and the U.S. are ongoing, President Donald Trump enacted his tariff agenda in the latter part of the quarter, having imposed a universal 10% tariff on all imports, as well as steep levies on foreign automobiles and select commodities.
A strong yen also weighed on exports, as a hawkish Bank of Japan and increased safe-haven demand boosted the currency.
The reading indicated that the Japanese economy was cooling after a moderately strong 2024. Softer domestic growth is likely to give the BOJ less headroom to raise interest rates.