ING Baring chief economist Richard Jerram said first quarter GDP will likely be boosted by fiscal and consumer spending but the following two quarters will be more of a concern as these factors wane.
"In the first quarter, spending should give a big kick. The real concern is the momentum in the second and third quarters, when the fiscal boost and consumer spending should wane again."
Meanwhile, net exports will remain negative with imports surprisingly strong in the face of the slowdown in overseas demand. "This is going to stay a negative in terms of feeding through to profits, capital spending and then to income and consumer spending," Jerram said.
Morgan Stanley Dean Witter strategist Noboru Kawai said upcoming growth figures are likely to go into reverse after the positive fourth quarter.
"Negative quarterly changes in private consumption after a flat first fiscal half was a negative surprise," Kawai said in a note. "Based on the expectation of a sharp quarterly reversal for business investment and new weakness in housing investment, I expect first quarter 2001 to produce negative overall numbers -- a quarterly decline of 0.5 pct."
However, "given the more recent strengthening in auto sales and unchanged developments in other components, the first quarter is likely to push up private consumption," allowing the government to almost achieve its year to March target of 1.2 pct growth.
BNP Paribas economist Ryutaro Kono said GDP will begin to decline on a quarter-on-quarter basis from the second quarter on a drop in capex.
"I expect that from the second quarter to June, GDP will begin to fall, as production and capital expenditure among Japanese firms are declining," he said, adding: "Earnings among Japanese firms are definitely slowing down."
Kono added that private consumption is falling due to the deteriorating employment situation and falling wages on the slowdown in corporate earnings, forecasting a rise in first quarter GDP of 0.2 pct quarter-on-quarter.
Mizuho Securities economist Osamu Katano said the Japanese economy "has already entered a recession phase" after peaking out in the latter half of 2000.
However, Japan may not see firm evidence of the trend for the time being, with the implementation of the public works projects outlined in last year's stimulus package helping to "support the downside."
"However, the Japanese economy may face a critical development around the July-September quarter, by which time any positive impact will have waned," he said.
Katano said the robust recovery in private sector capital spending seen in the fourth quarter is unlikely to be sustained, while consumer spending will remain sluggish.
"Given a lack of growth in sales, non-manufacturers ... are unlikely to increase investment ... to the extent of compensating for the slowdown in investment by manufacturers," he said.
Societe Generale economist Shuji Shirota said the fourth quarter GDP was slightly above expectations, with consumption weak but capital expenditure stronger than expected.
"Overall, the report is slightly stronger but there is still fragility in the consumption figures," while exports continue to weaken.
"It's a reflection of the slowdown in overseas economies. External demand should continue contributing negatively to growth," he said, but "the downward effect would be minor, compared to the key components of private demand."
Shirota added: "I think private demand will continue to stagnate for the time being, at least for the first half of the new fiscal year.
"We don't think the economy will slide back into recession but growth in the first half will be more or less zero before some pick-up in the second half."