Japan's economic recovery seen weaker with sticky inflation

JAPAN'S economic recovery is forecast to be losing momentum amid the growing concern over a synchronised global slowdown, according to economists surveyed by Bloomberg.

The world's third-largest economy is expected to post an annualised 3.4 per cent expansion in the quarter through June from the previous period, according to the median forecast by economists in the Jul 1-6 survey. That's down from the 4 per cent growth expected in the previous survey.

The recovery is forecast to keep slowing down from there with a 1 per cent increase seen in the second quarter of 2023.

The weaker outlook for Japan's economy reflects worries abroad, with rising bets that there may be a recession in the US. Further slowdowns in Japan may mean Prime Minister Fumio Kishida will have to speed up any plans to provide additional support for consumers and businesses.

Meanwhile, inflation is seen to be stickier. Consumer prices excluding fresh food are expected to stay at or above 2 per cent, the central bank's target, through the first quarter of next year.

The economy contracted in the first 3 months of this year mainly due to Covid-19 curbs on businesses. Consumption is expected to drive a rebound in the second quarter while rising inflation at home and an expected slowdown in Japan's key trading partners are generating headwinds against the recovery momentum. BLOOMBERG