Japan’s GDP in the first quarter of 2022 decreased by 0.1% compared to the previous quarter, according to the final data of the government of the country.
Preliminary data showed a decrease in GDP by 0.2%. Experts surveyed by Trading Economics, on average, expected a fall of 0.3%.

The decline in GDP in terms of annual rates in January-March was 0.5%, not 1%, as previously reported. The average forecast of analysts assumed a decrease of 1%.

For comparison: in the fourth quarter, the Japanese economy grew by 1% compared to the previous quarter and by 4% in terms of annual rates – the maximum since the fourth quarter of 2020.

The revision of the figures for the first quarter was due to an improvement in the assessment of consumer spending: they increased by 0.1%, while a decrease of 0.1% was previously reported.

The estimate of government spending growth was lowered to 0.5% from 0.6%. At the same time, business investments decreased by 0.7%, whereas earlier it was reported that they increased by 0.5%.

The estimate of the increase in exports remained at 1.1%, while imports were lowered to 3.3% from 3.4%.

Nevertheless, the economic situation in Japan today looks much more stable than in most developed countries. This is also evidenced by inflation data, which reached only 2.5% in April. The volume of imports in the first quarter increased by 3.4%, which, along with a reduction in consumer spending, led to a decrease in GDP. The central bank of the country continues to maintain an ultra-soft monetary policy, keeping interest rates in negative territory (-0.1%), despite the risks of inflation acceleration. The ongoing PREP led to a weakening of the Japanese yen against the US dollar by 16.40% since the beginning of 2022, which allowed to increase export revenues, which increased by 1.1% in the first quarter. So far, the Japanese authorities do not intend to tighten monetary conditions, since an acceptable level of inflation allows not to raise rates. In our opinion, Japan’s GDP will show the maximum decline in the II and III quarters, and economic growth will begin again by the end of 2022