According to the data released today, Japan’s GDP showed in the first 3 months of the year annual drop of 3.7% (-0.9% from the previous quarter) after losing 3% in the final quarter of 2010, while the economists were looking forward only to 1.9% decline.

Analysts at Mizuho Securities warn that the second quarter slump may be even greater as consumer spending and exports contract. In their view, in the third quarter Japanese economy may start recovering helped by the fixing of the supply-chain disruption and the beginning of reconstruction process.

Specialists at Daiwa Institute of Research claim that even though Japan’s economy may begin rebounding in the fourth quarter, it will fall by 0.4-0.5% in the fiscal year ending March 2012. Economists at RBS Securities note that Japanese companies that have seriously suffered after the earthquake won’t be much eager to increase business spending as the situation remains too uncertain.

Analysts at Barclays Capital are looking forward to see a V-shaped recovery in Japan in the period from July to September and afterwards driven by the self-sustaining recovery in production, an increase in government consumption and reconstruction.


Chart. Daily USD/JPY