TOKYO (Reuters – Japan’s economy is likely to have contracted over the first three months this year, as the lingering COVID-19 pandemic impacted consumption and exported goods. This was according to a Reuters poll.

It will be clear that policymakers are facing a difficult task in lifting the Third-largest Economy out of the deep depression caused by the Pandemic.

Although the economy will likely rebound in the third quarter, Russia’s invasion and occupation of Ukraine have impacted the prospects. This has resulted in a spike in oil prices as well as increased commodity and fuel prices.

According to analysts polled Reuters, the annualized gross domestic product (GDP), likely fell 1.8% after a 4.6% increase in the prior quarter. This would result in a 0.4% quarterly contraction.

Saisuke Sakai senior economist at Mizuho Research and Technologies said that the main reason for the decline in January-March GDP contraction was the drop in consumption. This is largely due to the Omicron virus outbreak.

“The slowing of global growth and the Ukraine crisis will make it difficult for Japan to recover,” he stated.

Private consumption, which is more than half GDP, fell 0.5% likely due to Omicron, the Omicron-related outbreak, that made it necessary for the government and other authorities to put restrictions on activities.

Due to weak exports, external demand (exports minus imports) likely slowed GDP growth by 0.3 percent.

According to poll, capital spending will have increased 0.7%, following a 0.3% rise in the quarter before.

Cabinet Office will release January-March GDP figures at 8:50 AM on May 18, (2350 GMT May 17).