Economy Minister Toshimitsu Motegi said there was no change to the government's view that the economy was recovering moderately, predicting a resumption in growth to be driven mainly by private consumption and capital expenditure.
The GDP deflator fell 0.2% on year, defying forecasts for a gain of 0.3% following the flat reading in the previous three months.
Slower export growth reflected a decline in shipments of mobile phone parts and factory equipment in the quarter, a government official said.
Given Japan's reliance on export-led growth, trade friction brought on by President Donald Trump's efforts to trim the perennial US trade deficit has raised uncertainty over the outlook for the economy.
Economists don't expect the period of contraction to last long.
Economists say Japan's first-quarter contraction is temporary, but the rebound will not be almost as strong as previous quarters. "However, it is clear that in the long term the pace of growth is slowing".
Japan's economy contracted by 0.2 percent quarter on quarter in the January-March period, the Cabinet Office reported Wednesday.
According to the WSJ, Capital Economics senior Japan economist Marcel Thieliant forecasts annual expansion to slow from 1.7% in 2017 to 1.2% this year. In the first quarter exports expanded by 0.6% after 2.2% growth in the previous quarter. But with wage increases lagging inflation, consumer spending has remained flat, the latest data showed.
"There are worries about some emerging economy markets but the global economy as a whole is likely to continue its recovery for some more time".
But SMBC Nikko Securities chief market economist Yoshimasa Maruyama warned that private consumption was weak even when the special factors were taken into consideration.