Japanese Q1 GDP Won't Disappoint Much

Forex News

According to the Reuters poll, Japanese economy in Q1 reduced less than projected. That is, the economy should have lowered an annualised 0.4%, while the initial forecast suggested 6%. It was mainly attributed to poor domestic demand and slowed exports. In quarterly terms, growth should have shrunk 0.1%, while the projection suggested 0.2%. The Q1 growth contraction ended the longest period of economic expansion since 1980s.

The revision was due to improved expectations about company spending. Capital expenditure was expected to grow from 0.1% to 0.2% qoq. Yoshiki Shinke (chief economist at Dai-ichi Life Research Institute) told: "The expected upgrade in capital spending likely helped the GDP to revised up". And: "But there is no change that the economy came to a temporary standstill at the beginning of this year after having grown solidly."

Yesterday’s data raised concerns about a recession the world’s third biggest economy. Household spending declined in April and services sector activity weakened in May. Industrial production disappointed investors as well. Shuji Tonouchi (senior market economist at Mitsubishi UFJ Morgan Stanley) noted: "We expect the economy will grow in the second quarter but the latest data suggest we need give heed to a possibility of a slower pace of recovery than previously expected". The Cabinet Office is about to release revised Gross Domestic Product on Friday.