Japan probably narrowly escaped recession in the first quarter but weak domestic and external demand and a strong yen will keep a lid on any recovery, a Reuters poll showed. Gross domestic product (GDP) likely expanded at an annualised 0.6 percent in January-March, the median forecast of 12 analysts showed, after the world's third-largest economy contracted in the fourth quarter of 2015, hurt by weak private consumption and housing investment.
But many analysts said even that meagre growth level is largely due to having an extra Leap Year day in the quarter, and believe economic growth was likely around zero or even contracted slightly if adjusted for that factor. "The overall economic elements are not good, especially consumer spending has been crawling to the bottom after a sales tax hike (in April 2014)," said Yoshiki Shinke, chief economist at Dai-ichi Research Institute.
"The outlook for capital spending is uncertain amid worries about corporate earnings, overseas demand is weak and the yen remains strong. So there are no economic factors to help the growth." Three of the 12 analysts surveyed believed the economy shrank in the first quarter, which would mean a second straight quarter of contraction - the definition of a technical recession - after a 1.1 percent decline in the final quarter last year. On a quarter-on-quarter basis, GDP was expected to grow 0.1 percent in the first quarter after a 0.3 percent contraction in October-December 2015.
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