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Japan: Q3 GDP data worse than initially reported on weaker investment

December 8, 2014

Economic activity fared worse than initially expected, after GDP contracted 1.9% in Q3 over the previous quarter in seasonally adjusted annualized terms (SAAR), according to new data released on 8 December. The reading was below the 1.6% decline reported in the first estimate and marked the second consecutive quarter of contraction, thereby confirming that Japan entered into technical recession. On an annual basis, economic activity fell 1.3% in Q3, which undershot the 0.4% drop tallied in Q2.

The downwardly revised figure showed that domestic demand was weaker than previously estimated, while the contribution from the external sector was left unchanged. Although growth in private consumption kept the previous 1.5% estimate, growth in government spending was weaker, moderating to 1.1% (previously reported: +1.3% quarter-on-quarter SAAR). Gross fixed capital formation declined a sharper 3.5% (previously reported: -2.2% qoq SAAR), while private non-residential investment contracted more than initially reported, falling 1.5% (previously reported: -0.9% qoq SAAR).

The Bank of Japan (BoJ) expects the economy to expand between 0.6% and 1.3% in the fiscal year ending March 2015. In the subsequent fiscal year, the BoJ sees GDP growth of between 1.2% and 1.6%. FocusEconomics Consensus Forecast panelists see GDP expanding 1.3% in calendar year 2014, which is down 0.2 percentage points from last month’s projection. For 2015, the panel also sees the economy growing 1.2%.


Author: Ricard Torné, Head of Economic Research

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Japan GDP Q3 2014

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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