Japanese companies' pace of annual spending on plant and equipment stalled in the first quarter after a year of strong expansion, likely prompting a downgrade to economic growth as concerns mount over the impact of the Middle East conflict. The Iran war has upended the global economic outlook, leaving oil-import-dependent Japan heavily exposed to the energy shock rippling across businesses and consumers. "Results were weaker than expected, reflecting a pullback from earlier strength," Meiji Yasuda Research Institute economist Kazutaka Maeda said. "But given steady demand for labour-saving investments and similar areas, capital expenditures are unlikely to deteriorate sharply from here," he added, though this would depend on "developments in the Middle East."