The Japanese economy contracted, in the first quarter of 2022, for the first time in two quarters, as anti-Covid-19 restrictions negatively affected the service sector, while the increase in commodity prices created more pressure, which raised fears of a prolonged slowdown.
This decline challenges Prime Minister Fumio Kishida’s drive to achieve growth and distribute wealth according to his “new capitalism” agenda, and reinforces fears of sluggish growth and high inflation.
The data revealed that the world’s third-largest economy contracted on an annual basis by 1% during the period between January and March, which is less than the estimates of analysts who had expected a contraction of 1.8%.
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Government office data revealed that this means a 0.2% quarter-on-quarter decline, compared to market expectations for a 0.4% decrease.
For the entire fiscal year 2021 ending in March; The economy grew by 2.1%, the first increase in three years.
Economy Minister Daichiro Yamagiwa said the economy is not expected to return to pre-pandemic levels, but further decline is likely to be limited.