Hay fever takes a toll on Japan's economy

the earth’s third-largest economy is usually shrinking again.

Japan’s gross domestic product contracted at an annualized rate of 0.6% inside first quarter of 2018, according to government data published Wednesday.

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that will snaps a run of eight consecutive quarters of growth, the longest Japan has achieved since the boom days of the late 1980s.

The limp first-quarter performance was spread across different areas of the economy, according to Marcel Thieliant, senior Japan economist at research firm Capital Economics.

“Private consumption as well as public demand were flat while investment spending as well as net exports fell slightly,” he said in a note to clients.

Related: Why Japan’s economy still needs help after $3 trillion binge

The contraction was bigger than economists had forecast. yet Japan may still dodge a recession, which is usually usually defined as two consecutive quarters of negative growth. Thieliant said he expects Japan’s economy to return to growth inside second quarter.

The country faces serious challenges, including a rapidly aging population, a lack of women inside workforce as well as stubbornly low inflation. Moderate inflation is usually not bad for an economy as that will encourages consumers to spend.

Japan just doesn’t possess the resources to keep growing at a healthy clip, according to Thieliant. that will can mean a shortage of drivers to deliver goods, not enough roads or ports to move cargo, or a lack of machinery for manufacturing products.

Japan’s recent growth streak was helped by years of massive stimulus through the Bank of Japan that will aimed to get businesses as well as consumers spending again after a prolonged period of stagnation as well as falling prices.

Related: Japan is usually set to miss out on the global growth party This kind of year

Jesper Koll, head of Japan at investment firm WisdomTree, said that will Wednesday’s disappointing economic data means the central bank won’t be turning off the money spigot anytime soon.

Rising wages aren’t prompting consumers to spend more. Households are saving the extra income instead, which suggests “a fundamental lack of confidence inside future,” Koll said.

Another problem for Japan could be its currency, according to analysts at investment bank Nomura said. The yen has strengthened more than 2% against the dollar since the start of the year, producing Japanese exports like cars as well as electronics more costly.

that will could rise further if global trade tensions spook markets because the Japanese currency is usually regarded as safe haven for investors during periods of turmoil, the Nomura analysts said.

“The Bank of Japan will want to do everything that will can to prevent a rise inside yen,” Koll added.

sy88pgw (Hong Kong) First published May 15, 2018: 10:11 PM ET