Japan’s economy shrank more than expected in the first quarter as a slow vaccine rollout and new COVID-19 infections hit spending on items such as dining out and clothes, raising concerns the country will lag others emerging from the pandemic.

Capital expenditure also fell unexpectedly and export growth slowed sharply, a sign the world’s third-largest economy is struggling for drivers to pull it out of the doldrums.

The dismal reading and extended state of emergency curbs have heightened the risk Japan may shrink again in the current quarter and slide back to recession, defined as two straight quarters of recession, some analysts say.

“Global chip shortages caused a marked slowdown in exports, putting a drag on capital spending as well,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.

“Consumption will probably remain stagnant, raising risks of an economic contraction in the current quarter.”

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