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

Watch video 01:22  Japan's economic upswing comes at a cost

Watch video 01:22 Japan's economic upswing comes at a cost

Japan's economy likely slowed to a crawl, or possibly even contracted slightly at the start of this year, which would break the longest run of growth seen for decades and thwart Prime Minister Shinzo Abe's reflationary "Abenomics" polices.

Expectations were for an annualised contraction of 0.2%.

Private consumption accounts for about 60% of Japan's economic activity.

The contraction, which was driven by a decline in investment and consumption and weaker exports, comes as Japan Inc worries about the possible effect of U.S. President Donald Trump's protectionist policies on global trade.

"The economy maintains momentum towards recovery but exports are slowing as global growth seems to have peaked in the fourth quarter", said Ryutaro Kono, chief economist at BNP Paribas Securities.

Australia will provide Q1 data for wage prices, which are expected to hold steady at 0.6% on quarter and 2.1% on year.

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"The economy is not headed for a recession", said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.

It followed a downwardly revised 0.6 per cent annualised rate of expansion in the fourth quarter, the Cabinet Office data showed.

Export demand added 0.1% to first quarter GDP but the rate of growth is slowing. The median estimate was for a 0.4 percent increase.

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

The median estimate was for consumer spending to remain unchanged.

"The economy is unlikely to continue to contract further".

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