The Japanese economy is contracting, although slightly less than previously thought.

YURI KAGEYAMA, Associated Press

7 hours ago

FILE – The headquarters of the Bank of Japan (BOJ) is seen in Tokyo on August 18, 2023. The Japanese economy shrank at an annual rate of 1.8% in the first quarter of this year, according to government data on Monday 10 June. 2024, revised slightly better than the initial estimate with a contraction of 2.0%. (AP Photo/Shuji Kajiyama, file)

TOKYO (AP) — Japan’s economy contracted at an annual rate of 1.8% in the first quarter of this year, slightly better than the initial estimate of a 2.0% contraction, government data shows revised Monday.

The revision is due to private sector investments, at minus 0.4%, up from the previous -0.5%.

Seasonally adjusted real gross domestic product, or GDP, a measure of the value of a country’s products and services, remained in negative territory as exports and consumption declined from the previous quarter.

Quarter-on-quarter, the economy shrank 0.5% in the January-March period, according to the Cabinet Office, unchanged from last month’s results.

The annual rate measures what would have happened if the quarterly rate had lasted for one year.

Wage growth has been slow and import prices have risen amid a decline in the Japanese yen against the U.S. dollar. The dollar has been trading at nearly 157 yen lately, compared to around 140 yen a year ago.

The weakness of the yen is causing tourism to boom. But that makes imports more expensive, a sore point for a country that imports almost all of its energy. Weak consumer spending also weighed on the economy. Private consumption represents half of Japanese economic activity.

Another negative is the ongoing scandal involving improper testing of vehicle models at several major automakers, including Toyota Motor Corp., which are the pillars of the Japanese brand’s power. Production has been stopped on certain models.

Government officials raided the Honda Motor Co. headquarters in Tokyo on Monday. Japanese media reported that a raid would soon be planned against Mazda Motor Corp. Toyota and Suzuki Motor Corp. have already been searched.

Last week, Toyota President Akio Toyoda apologized for numerous fraudulent tests involving the use of inadequate or outdated data during crash tests, improper testing of airbag inflation, damage to rear seats during accidents and engine power.

Vehicle safety is not affected, but the companies apparently wanted to speed up the testing process.

Investors are also closely watching the next action of the Bank of Japan, whose monetary policy council will meet later this week. The central bank raised interest rates earlier this year for the first time since 2007, but only to a range of zero to 0.1%, up from minus 0.1%.

“The position of the Japanese central bank will also be closely monitored, particularly in the context of a weak national currency. Japanese manufacturers face the fastest rising input costs,” S&P Global Market Intelligence said in a report.

Unemployment remained relatively low in the world’s fourth-largest economy, at around 2.6%. Japan is suffering from a severe labor shortage as its birth rate continues to decline, hitting a record low last year. The number of marriages has also decreased.

Such demographic trends could prove more dangerous in the long term, according to some analysts, who worry that Japan is particularly weak in terms of per capita output and that its lesser influence on the world stage could even lead to security risks .

Japan’s GDP is expected to rise to fifth place next year, after that of the United States, China, Germany and India, according to the IMF.

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Yuri Kageyama is on X: https://twitter.com/yurikageyama