Japan's GDP falls less than expected

Reuters

Japan's economy contracted less than initially reported in January-March on upward revisions.

Gross domestic product shrank a revised 1.8 percent annualized in the first quarter from the previous three months, Cabinet Office data showed yesterday, a smaller decline than economists' median forecast for a 1.9 percent contraction and a 2 percent decline in the preliminary estimate.

Analysts expect the Japanese economy to have bottomed out in the first three months of the year, although a stubbornly weak yen and disruptions at major automaker plants continue to cloud the outlook for the current quarter.

Still, "the revised GDP results made it easier for the Bank of Japan to feel encouraged about future rate hikes as it can assess capital investment is picking up even by a little bit," said Kohei Okazaki, senior economist at Nomura Securities.

The revised GDP data comes on speculation the BOJ may discuss cuts in its Japanese government bond purchases at its policy review this week as part of efforts to unwind monetary stimulus to curb the yen weakening.