Japan’s economy likely contracted 0.3% in the year’s first quarter, showing weakness even before US tariffs took effect.

The potential contraction could hurt the Bank of Japan’s policy plans and Prime Minister Ishiba’s election prospects. Economists cite weak consumer spending, stagnant wages, and slowing exports as key reasons for the downturn.

The BOJ may delay future rate hikes, with some analysts predicting a possible rate cut instead.

Major firms like Toyota are slashing profit forecasts due to tariff uncertainty, raising concerns about Japan’s economic resilience.

With weak growth, stubborn inflation, and low consumer demand, Japan faces stagflation risks and a possible technical recession.

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