Japan: Q3 growth revised upwards
December 8, 2010
In the third quarter, GDP increased 4.5% over the previous quarter in seasonally adjusted annualised terms, according to the second estimates released by the Cabinet Office on 8 December. The robust growth exceeded both the first estimate of a 3.9% expansion and the previous quarter's 3.0% expansion (previously reported: +1.8% quarter-on-quarter saar). The upward revision reflected stronger growth in the domestic sector, with domestic demand expanding 3.9% (previously reported: +4.6% qoq saar). In particular, private consumption growth was revised up a notch to a 4.8% expansion, as government stimulus measures aimed at boosting sales of cars and other durable consumer goods had a larger impact than previously estimated. In the same vein, fixed investment expanded at a faster clip than initially estimated, posting growth of 3.3% (previously reported: +2.4% qoq saar). Meanwhile, the Japanese external sector continues to struggle with the sustained strengthening of the yen and weaker growth in other major economies. As a result, export growth slowed markedly from 24.6% in the second quarter to 10.2% in the third. Meanwhile, imports remain robust, increasing 12.5% (Q2: +18.0% qoq saar), driving the net contribution from the external sector to overall growth from 1.2 percentage points in the second quarter to minus 0.1 percentage points in the third quarter. Consensus Forecast panellists anticipate growth to have peaked in the third quarter and see the pace softening in the coming quarters. In fact, the panel sees the economy contracting at an annualized rate of 1.1% in the final quarter of the year. Meanwhile, on the back of the stronger-than-expected third quarter reading, panellists revised their growth forecast up by 0.9 percentage points and expect GDP to grow 3.8% in 2010. Next year, the panel sees growth moderating to 1.3%, which is unchanged from last month's estimate.