Japan's first-quarter CPI shrinks by 1% year-on-year

Japan's first-quarter gross domestic product (GDP) contracted by 1% year-on-year, the second contraction since the third quarter of last year, but less than the 1.8% contraction expected by the market. On a quarterly basis, GDP contracted by 0.2%, compared with the market's original expectation of a contraction of 0.4%. The GDP growth rate in the fourth quarter of last year was also revised down to 0.9%. Japan's economic performance was sluggish in the first quarter, mainly due to Omicron's new crown epidemic and weak trade performance, reflecting that a weaker yen is adding to the burden of import costs. Although the local new crown epidemic has eased and is about to reopen, it is expected to support the economic performance in the second quarter. However, the combination of factors such as the rising energy prices brought about by the crisis in Russia and Ukraine, the accelerated tightening of monetary policy by the Federal Reserve, and the depreciation of the yen are expected to bring certain challenges to the future economic outlook.