
Japan's economy contracts less than expected, but US tariffs loom large over BOJ policy
Japan 's economy contracted in the first quarter of the year by less than initially estimated on better inventory and consumption figures, while still backing caution by the Bank of Japan (BOJ) as it weighs its policy path amid heightened uncertainty.
Advertisement
Gross domestic product shrank at an annualised pace of 0.2 per cent in the three months through March, the Cabinet Office said on Monday, compared with a 0.7 per cent retreat in preliminary data. Economists had expected that initial figure to stand.
Personal consumption rose 0.1 per cent, while business spending gained 1.1 per cent. Inventories contributed 0.6 percentage points to growth, while net exports posted a drag of 0.8 percentage points.
The revised figures confirmed that the world's fourth-largest economy contracted even before
US President
Donald Trump added to the headwinds facing the economy by expanding his tariff measures in April. For the BOJ, the data are still likely to support a wait-and-see approach for now, particularly after it slashed its growth forecast for this year at the last policy meeting.
People cross a street in Tokyo's Shinjuku business and shopping district. Japan's economy recorded its first economic contraction in four quarters. Photo: EPA-EFE
BOJ officials were very cautious about the impact of tariffs, which Governor Kazuo Ueda described as having 'extremely high' uncertainties. He warned last week that tariffs could affect Japan's economy through multiple channels, pledging to evaluate economic and price developments through a broad array of indicators.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


South China Morning Post
2 hours ago
- South China Morning Post
ByteDance, SenseTime unveil model updates as China's AI race heats up
China's artificial intelligence (AI) market sees heightened competition, as various model providers – from SenseTime to ByteDance – step up efforts to enhance their services. Hong Kong-listed SenseTime has upgraded its Cantonese-speaking chatbot, Sensechat, with a comprehensive set of new features that include real-time audio and video-interaction capabilities, according to the company's announcement on Thursday. Other enhancements include visual reasoning capabilities, which allow Sensechat to 'see' and 'think' while engaging with users. The feature was made possible by the multimodal reasoning capabilities of SenseTime's SenseNova V6 AI model , the company said. Multimodal models are designed to understand multiple types of input data such as text, video and audio, unlike traditional models that only handle one type. SenseTime is one of China's pioneering AI companies. Photo: Reuters That upgrade comes a day after TikTok parent ByteDance launched a suite of new AI models and tools at reduced prices, underscoring the intensifying competition in the domestic market after Chinese start-up DeepSeek's cost-effective products garnered global attention.


South China Morning Post
2 hours ago
- South China Morning Post
Hongkongers may have to pay higher tolls at Aberdeen Tunnel, Shing Mun Tunnels
Hongkongers may have to pay more to use the Aberdeen Tunnel and the Shing Mun Tunnels under a government proposal to raise tolls from HK$5 (64 US cents) to HK$8 to help recoup some of their hefty annual losses, the Post has learned. The tunnels' current flat fee of HK$5 for all vehicles has remained unchanged for 34 years. A source said on Thursday that authorities were planning to raise the toll to HK$8. The Shing Mun Tunnels recorded a deficit of HK$52 million in the 2023-24 financial year, while the Aberdeen Tunnel recorded a HK$16 million loss. The government's earlier forecasts indicated that the deficits would continue, with estimated shortfalls of HK$52 million and HK$21 million, respectively, this financial year. The source added that officials had also consulted legislators on toll options for the Yau Ma Tei tunnel section of the Central Kowloon Bypass, which is expected to open by the end of the year. Various options were being considered, including toll-free access and fees of HK$10 or HK$17.


South China Morning Post
2 hours ago
- South China Morning Post
State of US-China trade ties, Beijing's tariff relief for Africa: SCMP daily highlights
Catch up on some of SCMP's biggest China stories of the day. If you would like to see more of our reporting, please consider subscribing After two days of closely watched trade talks between the United States and China in London, US President Donald Trump has declared the negotiations have led to a wide-ranging deal to maintain the fragile truce laid out after earlier talks in Geneva. China's home-grown AG600, the world's largest amphibious aircraft, has been given the green light for mass production, marking a step forward in building an independent and globally competitive aviation industry. Illustration: Henry Wong Many who entered university during Trump's first trade war with China are ready to become key cogs in China's hi-tech engine.