Japan's economy grows annualized 2.1 pct in Q1

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It was the second successive expansion for the Japanese economy after growth of 0.4 per cent in the fourth quarter of previous year.

The details, however, revealed that imports declined faster than exports - a sign of weak domestic demand.

Underscoring this challenge were private consumption and capital expenditure readings, which both fell in the first quarter, while exports suffered the biggest fall since 2015.

Major Japanese business organizations support going ahead with the planned tax hike and top government spokesman Yoshihide Suga has recently said that the government would carry out the plan unless a crisis on the level of the 2008 financial meltdown happens.

The latest data was being closely watched amid speculation that weak growth could prompt Prime Minister Shinzo Abe's government to postpone a planned sales tax hike for the third time.

"The economy has already peaked out, so we are likely to have a mild recession", he said.

On a quarter-on-quarter basis GDP rose 0.5 percent, the Cabinet Office said, compared with the median estimate of a flat reading.

Japan is set to implement a sales tax increase from 8 percent to 10 percent later this year.

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Imports declined by 4.6% in Japan, even as exports fell by 2.4% during this period.

There have been growing calls from some former policymakers to delay the sales tax hike in the face of worsening domestic and external conditions.

While capital spending held up much better than expected during the first quarter, slowing global growth-especially in China, Japan's biggest market-and rising trade tensions have hit corporate sentiment.

"There's no change to our view that the fundamentals supporting domestic demand remain solid", Mr Motegi told reporters, according to Reuters.

"In the second quarter, GDP could be zero or slightly negative because exports will remain weak".

"The Japanese economy has come to a standstill", said Tsuyoshi Ueno, senior economist at the NLI Research Institute.

Prime Minister Shinzo Abe has already delayed the planned increase and uncertainties in the world economy - including slowing growth in China and its trade war with the U.S. - have prompted some concern that it may be delayed again.

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