TOKYO, Nov 2 Reuters Japan39;s economy likely shrank in the JulySeptember period, the first contraction in four quarters, according to a Reuters poll, heightening challenges for the central bank39;s exit from ultraloose monetary policy.

Gross domestic product GDP in the world39;s thirdlargest economy was projected to have eased by an annualised 0.6 in the third quarter, the poll showed, after expanding 4.8 in AprilJune.

On a quarteronquarter basis, the economy fell 0.1 in JulySeptember, the poll showed.

The weak reading likely reflects soft consumption and exports, suggesting that accelerating inflation and weakening demand in China are taking a toll on a fragile economic recovery.

Consumption is recovering as a trend as economic activity normalises from the COVID19 pandemic era, analysts at Daiichi Life Research Institute said.

But the recovery in consumption will likely remain moderate due to the pain from rising inflation, they said.

Consumption probably rose just 0.2 in JulySeptember from the previous quarter after slumping 0.6 in the AprilJune period, the poll showed.

Capital expenditure rose 0.3 in the third quarter after declining 1.0 in AprilJune, according to the poll.

External demand shaved 0.1 percentage point off GDP in JulySeptember after contributing 1.8 percentage points in AprilJune, the poll showed.

The government will release the preliminary JulySeptember GDP data at 850 a.m. on Nov. 15 2350 GMT Nov. 14.

With inflation exceeding its 2 target…