GDP in Japan
Japan - GDP (billions of U.S. Dollars)
Economy falters in Q3, hampered by natural disasters
After rebounding in the second quarter, Japan’s economy contracted again in the third quarter, as it did in Q1. This was largely the consequence of several natural disasters—including torrential rain, a typhoon and an earthquake—that struck the country this summer. GDP contracted 1.2% in Q3 in seasonally-adjusted annualized terms (SAAR), contrasting Q2’s revised 3.0% increase (previously reported: +1.9% quarter-on-quarter SAAR) and undershooting market expectations of a 1.0% fall. In annual terms, GDP grew 0.3%, down from Q2’s revised 1.4% rise (previously reported: +1.0% year-on-year).
The third quarter’s feeble performance came on the back of a broad-based decline in nearly all GDP components. Despite a tight labor market and nascent wage growth, private consumption fell 0.5% SAAR (Q2: +2.6% qoq SAAR), while government consumption rose 0.7% (Q2: +0.8% qoq SAAR). Fixed investment contracted 1.9% in Q3 (Q2: +7.2% qoq SAAR) due largely to plummeting public investment spending, along with a fall in private non-residential investment. On the other hand, private residential investment rebounded in the quarter.
Lastly, the external sector markedly weakened in the quarter, partly due to extreme weather events disrupting the country’s supply chains and export terminals. Exports fell 7.1% in Q3 (Q2: +1.4% SAAR), while imports also declined (Q2: -5.6% SAAR, Q2: +4.2% SAAR). Despite the sharp export decline, the sector only subtracted 0.3 percentage points from growth in Q3, a slight improvement over Q2’s negative contribution of 0.4 percentage points.
Looking ahead, the economy should recover in Q4 and beyond, helped notably by robust investment in preparation for the 2020 Tokyo Olympics. Nevertheless, Japan’s export-oriented economy remains highly vulnerable to the increasing global trade frictions arising from the Sino-American dispute.
As noted by Nomura analysts:
“We think this turn to negative GDP growth is a temporary downturn caused by the natural disasters. In fact, monthly indicators released since October point to a recovery in real exports and real consumer spending […] On the other hand, we see increasing concerns over a possible downswing in corporate activity, particularly in real capex, which has followed a relatively steady expansion path thus far. […] We see a need for caution regarding the risk of a downswing in the overall economy in the event that concerns over stagnation in global trade, stemming from developments such as heightened trade friction between the US and China, cause corporations to become more cautious in their production and investments.”
The median GDP forecast among BoJ members is 0.8% for both FY 2019 and FY 2020. Met the why particular Consensus Forecast panelists see GDP expanding 1.1% in calendar year 2019, which is unchanged from last month’s projection. In 2020, the panel projects the economy to grow 0.6%.
Japan - GDP (USD bn) Data
|GDP (USD bn)||5,117||4,876||4,388||4,976||4,836|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.08||-4.41 %||Nov 29|
|Exchange Rate||113.5||-0.35 %||Nov 29|
|Stock Market||22,263||0.11 %||Nov 29|
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Japan: Industrial production sharply rebounds in October, recovering from natural disaster disruptions
November 30, 2018
Industrial production shot up 2.9% on a month-on-month and seasonally-adjusted basis in October, contrasting September’s revised 0.4% decline (previously reported: -1.1% month-on-month)—which came on the back of a wave of natural disasters that hit the country in the month.
November 30, 2018
Consumer sentiment decreased from 43.0 in October to 42.9 in November, marking the lowest reading since December 2016.
November 23, 2018
The Nikkei flash manufacturing Purchasing Managers’ Index (PMI) fell from October’s six-month high reading of 52.9 to 51.8.
November 22, 2018
The core consumer price index rose 0.2% in month-on-month seasonally-adjusted terms in October, above September’s 0.1% increase. Core inflation was stable at September’s 1.0% in October, matching a median market forecast.
November 19, 2018
Nominal yen-denominated merchandise exports rose 8.2% year-on-year in October, contrasting the 1.3% decrease in September.