Economy

Japan's economy shrinks for first time in two years

Japan's economy shrinks for first time in two years

To get back on track, Japan needs to increase its exports.

According to the Japanese government, real GDP fell by 0.2% in the three months to March, undershooting expectations for an unchanged reading for the quarter.

In the first quarter exports expanded by 0.6% after 2.2% growth in the previous quarter.

The contraction, which was driven by a decline in investment and consumption and weaker exports, comes as Japan Inc worries about the possible effect of U.S. President Donald Trump's protectionist policies on global trade.

Japanese government officials expect the decline to be temporary.

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Analysts had expected a contraction, the first quarter pullback in two years.

Economists say Japan's first-quarter contraction is temporary, but the rebound will not be almost as strong as previous quarters. It ended the longest straight period of uninterrupted growth since the late 1980s.

Japan's economic system shrank at an annualized charge of 0.6 p.c within the quarter by March, as personal funding and public spending declined. Heavy snows in February also restricted household spending by keeping consumers inside and driving up vegetable prices.

A sales tax hike to 5 percent from 3 percent in 2014 caused a large fall in consumer spending and tipped the economy into recession.