TOKYO, May 10 Reuters Japan39;s economy likely contracted an annualised 1.5 in the JanuaryMarch quarter as all key drivers of growth slumped due to an uncertain outlook, a Reuters poll showed, which will probably set back Bank of Japan efforts to raise interest rates.

Cabinet Office data due out at 850 a.m. on May 16 2350 GMT on May 15 is expected to show the economy39;s contraction would be equivalent to monthly decline of 0.4, according to the poll of 17 economists.

The decline followed growth of 0.4 annualised in the last three months of 2023, with the main pillars of GDP collapsing and leaving no growth engine for the JanuaryMarch quarter.

The trend of thrifty consumers remains strong due to rising living costs likely being exacerbated by the yen weakening, said Takeshi Minami, chief economist at Norinchukin Research Institute, who predicted the overall economy would contract at 1.2 annualised in the JanuaryMarch period.

Private consumption, which makes up more than 50 of the economy, likely fell 0.2 in the quarter as consumers tightened belts to guard against the rising costs living.

The earthquakes that struck the Noto peninsula at the start of this year also undermined output and consumption. As well, a scandal at Toyota39;s compact car unit Daihatsu led to the suspension of output and shipments.

Capital expenditures also fell 0.7 quarteronquarter as companies remained slow to invest their hefty profits in plants and equipment, such as laboursaving…