Japan revises economic growth in Q1 downward; data shows sluggish demand

Japan revised its earlier estimates to show that its economy contracted at a 2.9 per cent annual pace in the first quarter of the year, as meanwhile a survey by the central bank released Monday showed conditions remain sluggish.

Analysts had expected the downward revision in the GDP data for January-March and said it was mainly based on a change in data on construction activity. The earlier estimate was of a 1.8 per cent contraction in annual terms.

The quarterly survey by the Bank of Japan showed a modest improvement in business sentiment among large and medium-size manufacturers. But details of the survey showed weakness in demand both in Japan and overseas.

Across all industries and firm sizes, business conditions held steady at 12, which is on past form consistent with (quarterly) GDP growth of around 0 per cent, Marcel Thieliant of Capital Economics said in assessing the tankan.

A renewed slowdown in GDP growth this quarter would be consistent with the slump in industrial ...