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.