RPT-Japan Q1 GDP down 0.9 pct q/q on quake damage

Wed May 18, 2011 7:58pm EDT

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TOKYO May 19 (Reuters) - Japan's economy shrank 0.9 percent in January-March from the previous quarter, marking a second straight quarter of contraction, Cabinet Office data showed on Thursday, as the March earthquake and tsunami and ensuing nuclear crisis weighed heavily capital spending and private consumption.

The quarter-on-quarter contraction in Japan's gross domestic product was bigger than the average forecast of a 0.5 percent contraction in a Reuters poll of economists.

The result translated into an annualised contraction of 3.7 percent, much worse than the median economist forecast of a 2.0 percent contraction and compared with annualised growth of 1.8 percent in the United States in the same quarter.

Private consumption, which makes up about 60 percent of the economy, fell 0.6 percent, as consumers cut spending after the quake.

External demand, or net exports, pushed down GDP by 0.2 percentage point, as the disaster disrupted supply chains and prevented Japanese manufacturers from shipping goods abroad, while radiation leaks at a crippled nuclear power plant in Fukushima caused some countries to halt Japanese goods imports.

Many economists project the economy could worsen further in April-June due to the effects of the March catastrophe but see a recovery later this year, helped by reconstruction efforts and government spending. But risks to the economy persist as power shortages in the summer could delay a recovery in factory output. (Reporting by Tetsushi Kajimoto and Rie Ishiguro; Editing by Chris Gallagher)

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