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Japan: Economy avoids recession in Q3 on strong investment

December 8, 2015

Revised data confirmed that the Japanese avoided a recession in Q3 as investment was stronger than previously reported. GDP rose 1.0% in Q3 over the previous quarter in seasonally adjusted annualized terms (SAAR), according to new data released on 8 December. The reading contrasted the 0.8% drop reported in the first release and represented a reverse from the 0.5% decrease tallied in Q2. On an annual basis, economic activity rose 1.7% in Q3. The print was up from the 1.0% increase tallied in the first estimate and marked the fastest expansion since Q1 2014.

The upwardly revised figure showed that investment fared better than in the previous estimate, while private consumption recorded weaker figures. The contribution to growth from the external sector was left broadly unchanged. Private consumption decelerated from the 2.1% increase initially reported to a 1.5% expansion, while government spending rose 1.1% (previously reported: +1.2% quarter-on-quarter SAAR). Gross fixed capital formation expanded 1.2% (previously reported: -2.5% qoq SAAR) and private non-residential investment rose 2.3% (previously reported: -5.0% qoq SAAR).

The Bank of Japan (BoJ) expects the economy to expand between 0.8% and 1.4% in fiscal year 2015, which ends in March 2016. In the subsequent fiscal year, the BoJ sees GDP growth of between 1.2% and 1.6%. FocusEconomics Consensus Forecast panelists see GDP expanding 0.6% in calendar year 2015, which is down 0.1 percentage points from last month’s projection. In 2016, the panel sees the economy growing 1.1%, which is also down 0.1 percentage points from last month’s estimate.


Author: Ricard Torné, Lead Economist

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Japan GDP Q3 2015

Note: Quarter-on-quarter seasonally adjusted annualized changes and annual variation of GDP in %.
Source: Cabinet Office (CO) and FocusEconomics Consensus Forecast.


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