Japan’s GDP likely to have shrunk in last quarter

Japan’s economy is expected to have contracted slightly more than initially estimated in the final quarter of 2015, and ominously the outlook held little cheer as domestic and external demand has remained stubbornly weak at the start of this year.

The world’s third-largest economy is forecast to have shrunk by an annualised 1.5% over the last three months of last year, according to a Reuters poll of 21 analysts, slightly worse than the early estimate of a 1.4% contraction.

The quarter-on-quarter GDP change was seen as being down 0.4%, unchanged from the initial estimate.

“Consumer spending and external demand are weak, and an inventory adjustment has continued longer than expected,” said Hideaki Kikuchi, economist at Japan Research Institute.

“But wages and employment remain firm, so at the moment I don’t expect that the economy will deteriorate significantly.”

Tellingly, few if any analysts are predicting a sure-footed recovery over the near term, especially in the face of a stuttering global economy, sharp slide in exports and weak growth in private consumption.

Prime Minister Shinzo Abe will convene an advisory panel to discuss the global economy, energy and the financial sector and an extra budget for the coming fiscal year is also expected to be an agenda.