Japan revises Q1 GDP on smaller hit to domestic demand

Japan’s economy contracted less than initially recorded in the first quarter on smaller cuts to plant and equipment spending. However, the impact of the coronavirus pandemic took a toll on overall demand.

Asia’s second-largest economy plunged by an annualized 3.9% in the first quarter of 2021, not as bad as the initial reading of a 5.1% contraction, the data from the Cabinet Office data showed Tuesday. Despite the milder contraction, it still posted the country’s first economic downturn in three quarters.

On separate data, bank lending institutions in Japan showed growth in May, while real wages posted the biggest monthly jump in more than a decade in April, indicating that the world’s third-largest economy was gradually rising from last year’s pandemic crisis.

The reading equals a real quarter-on-quarter contraction of 1.0% from the prior quarter, compared to an initially posted 1.3% fall.