Domestic Demand in Japan
Japan - Domestic Demand
Q2 GDP growth revised downwards on capital expenditure downgrade
The downward revision to the GDP figure for Q2 sparked concerns about the future growth trajectory of the country as the economy is grappling with negative spillovers stemming from the China-U.S. trade war and uncertainty regarding the planned sales tax hike in October. According to revised data released by the Cabinet Office on 9 September, GDP rose 1.3% over the previous quarter in seasonally-adjusted annualized terms (SAAR), a weaker expansion than the 1.8% increase initially estimated (Q1: +2.2% SAAR). In annual terms, GDP expanded 1.2% in Q2, accelerating from Q1’s 1.0% increase.
A weaker-than-expected expansion in private non-residential investment (Q2: +0.8% quarter-on-quarter SAAR; previously reported: +6.1% qoq SAAR) led gross capital fixed investment to moderate sharply compared to the previous estimate. Private and government spending were left mostly unrevised, as were exports and imports of goods and services.
Looking forward, Takashi Miwa, Nomura’s chief Japan economist, added that:
“We think whether the Japanese economy will be able to sustain the current trend of gradual expansion will depend on whether heightened uncertainty regarding overseas economies, stemming primarily from the intensification of the trade conflict between the US and China, will result in further downward pressure on capex by Japanese companies, and whether the consumption tax rate hike planned for October will lead to a collapse in consumer spending.”
BoJ members forecast GDP to grow between 0.6% and 0.9% in FY 2019 and between 0.8% and 1.0% in FY 2020. FocusEconomics Consensus Forecast panelists, meanwhile, see GDP expanding 0.9% in calendar year 2019, which is up 0.1 percentage points from last month’s projection, and 0.5% in 2020.
Japan - Domestic Demand Data
|Domestic Demand (annual variation in %)||2.4||0.4||0.8||0.0||1.4|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||-0.28||-4.41 %||Sep 04|
|Exchange Rate||106.4||-0.35 %||Sep 04|
|Stock Market||20,649||0.40 %||Sep 04|
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October 10, 2019
Core machinery orders, a leading indicator for capital spending over a three- to six-month period, contracted for the second month in a row in August, suggesting that an uncertain global economic outlook is weighing on investment planning.
October 2, 2019
Consumer sentiment declined from 37.1 in August to 35.6 in September.
October 1, 2019
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers in Q3 2019 declined to the lowest point since Q2 2013 as rising trade protectionism and subdued global growth take their toll on Japan’s all-important external sector.
September 30, 2019
Industrial production fell 1.2% on a month-on-month and seasonally-adjusted basis in August, contrasting July’s 1.3% increase.
September 24, 2019
The Jibun Bank flash composite Purchasing Managers’ Index (PMI) fell from August’s 51.9 to 51.5 in September.