Japan cuts first-quarter GDP after adjusting for construction figures

TOKYO (Reuters) – Japan’s economy shrank more than initially reported in the first quarter, the government said on Monday in a rare unscheduled revision to gross domestic product (GDP) data, darkening the outlook for a fragile recovery.

Analysts say the downgrade is likely to lead to a cut in the Bank of Japan’s growth expectations in new quarterly forecasts due later this month. This could also influence the timing of the next interest rate increase.

Japan’s real GDP contracted at an annual rate of 2.9% in January-March, down from an earlier estimate of a 1.8% contraction, the revised data showed.

Real GDP for the October-December period was also revised down to growth of 0.1% year-on-year from the previous increase of 0.4%, while that for the July-September period was revised down to a decline of 4.0% year-on-year from the previous decline of 3.7%.

According to the government, the revisions to GDP figures for January-March reflect corrections in construction orders data.