Japan: Economy shrinks less than initially expected in Q4
March 8, 2012
In the fourth quarter, GDP contracted 0.7% over the previous quarter in seasonally adjusted annualised terms (saar), according to a second estimate released on 8 March. The reading was revised up from the preliminary 2.3% drop published by the Cabinet Office (CO) on 13 February, but came in line with market expectations. On an annual basis, GDP contracted 0.6% over the same quarter the year before (previously reported: -1.0% year-on-year). The revision confirmed that the fourth quarter's decline was mainly caused by a deteriorating external sector, while domestic demand remained resilient, bolstered by capital spending. Private non-residential investment jumped 20.7% (previously estimated: +7.9% quarter-on-quarter saar), whereas private consumption and government spending remained broadly unchanged over the previous estimate's figures. On the other hand, exports of goods and services contracted 11.8% (previously estimated: -11.9% qoq saar), while imports expanded 4.3% (previously estimated: +4.1% qoq saar). As a result, the external sector's annualised net contribution to overall growth remained unchanged over the initial estimate at minus 2.6 percentage points. In the full year 2011, GDP contracted 0.7%, softer than the preliminarily reported 0.9% drop. The Bank of Japan expects economic activity to contract 0.4% in the fiscal year ending in March 2012 and to rebound 2.0% in the following fiscal year.