Japan's Premier Shinzo Abe - Photo by Japan Government

JAKARTA (TheInsiderStories) – Japan’s gross domestic product contracted at an annualized rate of 0.6 per cent in the first quarter of 2018, according to government data published Wednesday.

The world’s third-largest economy shrank at an annualized pace of 0.6 per cent in the January-March period, compared with revised 0.6 per cent growth in the final quarter of 2017.

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

Private consumption, which accounts for about 60 per cent of GDP, stayed flat in the latest quarter after heavy snow in January and February caused people to stay home, while higher fresh-food and energy prices made consumers reluctant to spend.

Overall cash wages rose 2.1 per cent from a year earlier in March—their fastest pace since June 2003, according to recent data released by the labor ministry.

The new data are a setback for Prime Minister Shinzo Abe, who has used the run of growth as evidence of the success of his economic platform, known as Abenomics. Mr. Abe, who faces a party leadership election in September, has also been under pressure from opposition lawmakers’ allegations that he did favors for friends, charges he denies.

Still, government officials and analysts expect the decline to be temporary. Some analysts expect the economy to rebound as soon as this current April-June quarter.

Tokyo stocks opened lower Wednesday following Wall Street’s overnight decline and on reports just before the opening bell that Japan’s economy shrunk at an annualized rate of 0.6 percent in the January-March quarter.

As of 9:15 a.m. local time, the 225-issue Nikkei Stock Average dropped 47.21 points, or 0.21 percent, from Tuesday to 22,770.81.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 2.24 points, or 0.12 percent, to 1,802.91.

Bank, mining, and oil and coal product-linked issues comprised those that declined the most in the opening minutes after the morning bell.

Meanwhile, the International Monetary Fund (IMF) said that it expects the Japanese economy to grow 1.2 percent in 2018, maintaining the projection it made in January.

In its latest World Economic Outlook report the IMF also kept intact its 2019 growth forecast for Japan, at 0.9 percent, citing favorable external demand and rising private investment as contributing factors.

The country faces a rapidly aging population and a lack of women in the workforce, while inflation has remained stubbornly low. Moderate inflation is good for an economy as it encourages consumers to spend.