Japan's economy just shrunk for the first time in over 2 years

Koichi Kamoshida/Getty ImagesKoichi Kamoshida/Getty Images

The Japanese economy shrunk in early 2018, recording its first quarterly contraction since late 2015.

According to the Japanese government, real GDP fell by 0.2% in the three months to March, undershooting expectations for an unchanged reading for the quarter.

It was the first decline in nine quarters, snapping the longest stretch of continued expansion since the late 1980s.

Domestic demand lopped 0.2 percentage points (ppts) of quarterly growth, driven lower by declines in housing investment and private business inventories.

Private consumption, the largest part of the Japanese economy, was unchanged, a result that was in line with market expectations.

The surprise quarterly decline saw the seasonally-adjusted annual rate decline to -0.6%, below the -0.2% level forecast by economists.

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