Japan's economy shrank an annualized real 1.8 percent in the January-March quarter, revised up from its earlier reading of a 2.0 percent decline, as corporate capital spending fell less than initially thought, the Cabinet Office said Monday.
It was the first contraction in two quarters due to soft domestic demand and the effects of a safety data-rigging scandal at a Toyota Motor Corp. group firm that dented production and exports.
Adjusted for inflation, Japan's gross domestic product -- the total value of goods and services produced in a country -- fell 0.5 percent from the previous quarter, unchanged from the preliminary report when rounded.
The unrounded figure was a 0.46 percent drop, compared with the earlier reported 0.50 percent which, when annualized, resulted in the 0.2 percent revision, according to the office.
Capital investment, which fell 0.8 percent in the preliminary data, was revised up to a 0.4 percent drop, down for the second straight quarter.
Private consumption, another key component of domestic demand that accounts for more than half of the economy, fell 0.7 percent, unchanged from the previous reading.
It marked the fourth consecutive quarter of decline.
The government has taken the view that the economy continues to recover moderately despite some weakness. But the revised data underscored its fragility as the post-coronavirus pandemic recovery in demand has run its course and rising prices for everyday goods continue to weigh on consumer sentiment.
"Despite the upward revision, capital investment was weak. Japanese firms have a proactive stance on investment but labor shortages are among the bottlenecks preventing them from going ahead with their plans," said Yuichi Kodama, chief economist at the Meiji Yasuda Research Institute.
Many analysts expect the economy to rebound in the April-June quarter, though uncertainty remains over the impact of the deepening auto safety test scandal at Japanese automakers that has led shipments of some models to be suspended.
A temporary 40,000 yen ($255) income and resident tax cut began in June, the latest attempt by Prime Minister Fumio Kishida, hit by faltering public support, to assist households who have yet to see their wages grow faster than inflation.
"Given that it will take more time, until around August, for wage growth to outpace rising prices, the weakness in private consumption is understandable. For the coming months, the tax cut will help support households," Kodama said, expecting a modest boost to GDP.
Exports fell 5.1 percent, at a faster pace than a 5.0 percent decline in the earlier report, reflecting the wider effects of the auto scandal.
The drop came despite a boost from a revival of inbound tourism. Spending by foreign visitors to Japan contributes to export figures.
Public investment rose 3.0 percent, revised down from 3.1 percent.
Nominal GDP was cut to a 0.03 percent increase from the 0.1 percent in the preliminary data. It increased at an annualized rate of 0.1 percent, slower than the previously reported 0.4 percent.
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