Japanese economy is reduced in more than expected

The Japanese economy suffered its first quarterly contraction for a year in January-March, preliminary data was shown on Friday, and analysts warned that Donald Trump’s rates could be tilted in recession if an agreement does not occur.

The 0.2% contraction during the quarter was more than expected and will blow the Prime Minister Shigeru Ishiba ahead of the parliamentary elections in July, with voters already angry by inflation and corruption within the governing party.

Observers said that the figures, compared to the growth of 0.6% of the last three months of 2024, could also mean that the Bank of Japan will have to wait a little longer before resuming its monetary narrowing program.

The last time the world number four in the world was in January 2024, when it hired 0.4%.

Annualized, the economy reduced 0.7% in the first quarter.

Faced with the data, experts said that Japan would face the headers, as the United States President’s trade war exceeds the global economy, and while Tokyo is in discussions with the White House to avoid the entire impact, there are still many concerns.

“Uncertainty is greatly increased by Trump’s rates, and it is likely that the tendency of economic slowdown will be clearer since the (second quarter),” said Ryutaro Kono, a chief economist at BNP Paribas.

Trump’s hard ball campaign to correct what they say are unfair commercial imbalances include rates for commercial partners and imports, including steel and cars.

But the economic discomfort of Japan is deeper than the trade war.

With domestic demand and foreign demand, the economy “remains without force,” said Yoshiki Shinke, from Dai-Iichi Life Research Institute.

“The possibility of the economy will not be ruled out, depending on the degree of pressure on the lowest caused by the fare question,” he warned before the release of Friday.

The data show that exports, a key growth engine, dropped 0.6% during the quarter, while imports jumped by 2.9%, with a weight of global GDP.

This month, the Bank of Japan reviewed its growth forecasts and maintained constant interest rates, warning that commercial rates fueled world economic uncertainty.

“With the North -American rates planned for export growth, the decision of the Japan bank to become more unpleasant about the economic perspectives of its previous meeting seems to be claimed,” said Marcel Thiesti of Economic Capital on Friday.

The Central Bank “will probably wait even longer before resuming its tightening cycle than we had planned,” he predicted.

Stefan Angrick, from Moody’s Analytics, said that government policies could fulfill the risk of its economy over the United States’ rates.

“The government of Ishiba so far has opposed fiscal support for the economy, a strategy that seemed unsustainable even before the trade war was over,” he wrote on Friday.

“With the public support that is maintained, a policy pivot can be inevitable, but it could be too late to make a difference.”

The figures occur when Istiba is preparing for the Alta House elections in Japan in Japan in two months.

Its coalition was deprived of the majority in the powerful home in October, as voters avoided their anger in increasing prices and political scandals.

It was the worst result of the election in 15 years for the Liberal Democratic Party (LDP), which has ruled Japan almost continuously since 1955.

This story originally presented to Fortune.com

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