Japan's economy shrank at an annualized rate of 0.6 percent in the quarter through March, as private investment and public spending declined, according to Cabinet Office data released Wednesday.
TOKYO, May 16 (Reuters) - Japan's economy contracted more than expected at the start of this year, breaking the longest run of growth seen for decades, in a blow to Prime Minister Shinzo Abe's reflationary "Abenomics" polices. But experts said it was not the beginning of a longer downswing.
The yen also strengthened against other major currencies on safe-haven buying, clouding the prospects for Japanese exporters.
"The economy is unlikely to continue to contract further".
They say the preliminary real GDP fell 0.2 percent from the previous quarter.
Private consumption, the largest part of the Japanese economy, was unchanged, a result that was in line with market expectations.
External demand - or exports minus imports - added 0.1 percentage point to first-quarter GDP, as imports slowed more than exports.
Our assessment of the factors seemingly behind the negative growth is that the deterioration in consumer spending is likely due to curbed spending owing to poor weather conditions in Japan, such as heavy snowfall, and the slowdown in exports likely reflects a temporary slowdown in overseas economies.
Katsunori Kitakura, lead strategist at Sumitomo Mitsui Trust Group, also believed the disappointing first quarter figure was "a one-off event, as weak personal consumption coincided with other special factors". "Consumers will keep purse strings tight unless the pace of wage increases shows a clear acceleration", said SMBC Nikko Securities Chief Market Economist Yoshimasa Maruyama.