Japan’s economy shrinks in January-March quarter

TOKYO — Japan’s economy shrank at an annualized rate of 0.6 per cent in the quarter through March, as private investment and public spending declined, according to Cabinet Office data released Wednesday.

Japan’s gross domestic product — the value of a nation’s goods and services — dipped on-quarter 0.2 per cent. The annualized rate, which is also seasonally adjusted, is what that decline would have been if it had continued the whole year.

Analysts had expected a decline, and say it is not likely to show a serious ongoing slowdown.

The Japanese economy has been relatively healthy in recent quarters, picking up from the doldrums that spanned previous decades, on extremely free lending and a government program designed to fight deflation — the continual spiraling down of prices. Deflation has been a major problem for Japan.

The latest data showed consumer spending was flat.

Prime Minister Shinzo Abe has been seeking to drive the world’s third largest economy through programs dubbed “Abenomics.”

Japan depends on global growth to fuel its own economy for which exports are crucial. Uncertainty looms over the potential trade frictions set off by the recent moves announced by President Donald Trump. Japan’s exports to the U.S. could suffer, and indirectly its economy will likely take a hit, if China’s exports to the U.S. fall.

Abe’s administration has enjoyed relative stability, compared to past administrations, as well as good ties with Trump. That has proved a relative boon for the economy.

But it has recently been hit by a series of scandals of cronyism and sexual harassment, setting off speculation he may be replaced in the next ruling party election for a leader.

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