Q1 annualised GDP 1.0 vs forecast 1.8
Consumption, import bills weigh on growth
Ukraine war, COVID19, costpush inflation cloud outlook
Weak data may prompt call for more spending as polls loom

TOKYO, May 18 Reuters Japan39;s economy shrank for the first time in two quarters in the JanuaryMarch period as COVID19 curbs hit the service sector and surging commodity prices created new pressures, raising concerns about a protracted downturn.

The decline presents a challenge for Prime Minister Fumio Kishida39;s drive to achieve growth and wealth distribution under his new capitalism agenda, stoking fears of stagflation a mix of tepid growth and rising inflation.

The world39;s No. 3 economy fell at an annualised rate of 1.0 in JanuaryMarch from the previous quarter, gross domestic product GDP figures showed, slower than a 1.8 contraction expected by economists. That translated into a quarterly drop of 0.2, the Cabinet Office data showed, versus market forecasts for a 0.4 drop.

The weak reading may pressure Kishida to release even more stimulus with upper house elections pencilled in for July 10, following the 2.7 trillion yen 20.86 billion in extra budget spending compiled on Tuesday.

The economy will return to growth in the coming quarters but it won39;t be a dramatic recovery, leaving the possibility of further spending wide open as elections draw near, said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

The lockdown in China and U.S. rate hikes as…