Japan's Q1 GDP reduced less than the expected amid COVID-19 Resurgence

Revised gross domestic product (GDP) data released by the Cabinet Office on Wednesday showed that the Japan's economy shrank at 0.5% in January-March. Which was a smaller drop than the expected reading of a 1.0% fall released last month.

Japan's economy reduced slightly less than initially reported in the first quarter, as private consumption remained resilient in the face of resurgent COVID-19 infections and companies rebuilt their stock, offsetting a drop in business spending, Reuters reported.

On a quarter-on-quarter basis, GDP lost 0.1%, beating median market expectations for a 0.3% drop.

Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute said, “an increase in inventories also supported growth, in a sign that automakers and other manufacturers were looking for ways to cope with supply chain pressures.”

"Growth is likely to come in positively, but that isn't likely to lead to a wide sense of recovery," Tsunoda added while warning of the negative impact in the second quarter from China's strict coronavirus lockdowns.

"Japan's economy relies heavily on Asian supply chains, so China's lockdowns will have a relatively big impact."

©Photo: Reuters