Japan: Economic activity slows markedly in Q2
August 13, 2012
In the second quarter, GDP rose 1.4% over the previous quarter in seasonally adjusted annualised terms, which was below the revised 5.5% rise recorded in the first quarter (previously reported: +4.7% quarter-on-quarter saar). In addition, the print fell short of the 2.3% increase expected by the market. On an annual basis, economic activity expanded 3.5% in the second quarter (Q1 2012: +2.9% year-on-year). The domestic side of the economy deteriorated markedly amid a sharp slowdown in total consumption. Private consumption expanded at the slowest pace recorded since Q1 2011, adding only 0.6% in Q2 (Q1: +5.0% qoq saar), while government spending rose 1.2% (Q1: +4.1% qoq saar). On the other hand, private non-residential investment rebounded from a 6.2% contraction in the first quarter to a 6.3% expansion in the second. The external sector deteriorated in the second quarter, with exports of goods and services adding only 4.8% over the previous quarter in annualised terms, well below the 14.3% rise observed in the previous quarter. Meanwhile, import growth moderated from a 9.1% rise in the first quarter to a 6.4% increase, mainly due to lower fuel prices. As a result, the external sector's annualised net contribution to overall growth swung from plus 1.1 percentage points in the first quarter to minus 0.1 percentage points in the second. The Bank of Japan expects economic activity to expand between 2.1% and 2.4% in the fiscal year ending in March 2013 before, moderating to a range of between 1.5% and 1.8% in the following fiscal year.
Author: Armando Ciccarelli, Head of Data Solutions