Japan's economy likely shrank less than initially estimated in first quarter - Reuters poll

FILE PHOTO: Pedestrians make their way at a business district in Tokyo, Japan, December 7, 2020. REUTERS/Kim Kyung-Hoon
FILE PHOTO: Pedestrians make their way at a business district in Tokyo, Japan, December 7, 2020. REUTERS/Kim Kyung-Hoon

By Leika Kihara

TOKYO (Reuters) - Japan's economy likely shrank slightly less than initially estimated in the first quarter, a Reuters poll showed, though state of emergency curbs to combat the coronavirus pandemic are seen keeping any rebound in the current quarter modest.

Separate data due next week will also show wholesale prices continued to rise sharply in May, a sign rising raw material costs are squeezing corporate profits, the poll also showed on Friday.

Revised gross domestic product (GDP) data will likely show the world's third-largest economy shrank an annualised 4.8% in January-March, less than a preliminary reading of a 5.1% drop, according to economists polled by Reuters.

The revision largely reflects a smaller-than-expected fall in capital expenditure, after incorporating the Ministry of Finance's quarterly corporate survey released after the preliminary GDP announcement.

Despite the upward revision, many analysts remain cautious about Japan's economic outlook as extended state of emergency curbs weigh on consumption, offsetting the boost to growth from robust exports.

"We expect Japan's economy to suffer two straight quarters of contraction in April-June as chip supply shortages hurt car output and state of emergency curbs weigh on consumption," said Saisuke Sakai, an economist at Mizuho Research & Technologies.

Automakers across the globe, including those in Japan, have suffered disruptions in output due to a shortage of semiconductors, which some makers blame on a faster-than-expected recovery in demand from the pandemic.

The government will release revised January-March GDP data on June 8 at 8:50 a.m. (June 7, 2350GMT).

Japan's wholesale prices likely rose 4.5% in May from a year earlier after jumping 3.6% in April, according to the poll.

While the increase is due partly to the base effect of last year's plunge caused by the pandemic, it also reflects rising energy and commodities costs that could worsen terms of trade for an economy heavily reliant on raw material imports.

The Bank of Japan will release the wholesale price data on June 10 at 8:50 a.m. (June 9, 2350GMT).

(Reporting by Leika Kihara; Editing by Ana Nicolaci da Costa)

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