Japan GDP Q2 2018


Japan: Q2 GDP growth revised upward on stronger investment dynamics

September 10, 2018

A second data release showed that the Japanese economy fared better than previously reported on the back of stronger-than-expected investment growth. According to revised data released by the Cabinet Office on 10 September, the economy expanded 3.0% over the previous quarter in seasonally-adjusted annualized (SAAR) terms in Q2, up from the preliminary estimate of a 1.9% rise (Q1: -0.9% quarter-on-quarter SAAR). Q2’s print represented the strongest expansion in over two years. In annual terms, GDP rose 1.3% in Q2, accelerating from Q1’s 1.0% growth.

An upswing in capital expenditure led the upward revision. Gross fixed capital formation expanded 7.2% compared to the 1.9% increase initially reported. Similarly, growth in private non-residential investment jumped to 12.8% (previously reported: +5.2% qoq SAAR), while public investment expanded for the first time in one year. Growth in private consumption and public spending, as well as the contribution from the external sector, were left broadly unchanged compared to the first estimate.

GDP data from the second quarter corroborated that the Japanese economy recovered quickly from the short-lived contraction in Q1. That said, economic growth will likely moderate in Q3 due to adverse weather effects following heavy rains in July and a typhoon in September, as well as due to softening export growth amid escalating trade tensions.

The Bank of Japan (BoJ) expects the economy will expand between 1.3% and 1.5% in the 2018 fiscal year, which ends in March 2019. In the subsequent fiscal year, the BoJ sees GDP growth at between 0.7% and 0.9%. FocusEconomics Consensus Forecast panelists see GDP expanding 1.1% in calendar year 2018 and 1.0% in calendar year 2019.


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Japan GDP Chart

Japan GDP Q2  2018 1

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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