ANALYSTS: Japan Q3 GDP To Show Modest Growth on Exports

--MMI Median Economist Forecast: +0.4% Q/Q, +1.6% Annualized

--Consumption, Public Works Seen Down After Strong Q2 Gains

     TOKYO (MNI) - Japan's gross domestic product for the July-September quarter

is expected by economists to post a modest 0.4% rise on quarter, or an

annualized 1.6%, as a rebound in net exports offset a slump in consumer spending

caused by bad weather.

     The median forecast for Q3 GDP is based on projections by 10 economists

which ranged from +0.2% to +0.4% on quarter, or an annualized +0.6% to +1.7%.

     The Cabinet Office will release preliminary GDP data for the third quarter

of 2017 at 0850 JST on Nov. 15 (2350 GMT on Nov. 14).

     The expected expansion in Q3 would be the seventh consecutive quarterly

gain. GDP surged 0.6% on quarter, or an annualized +2.5%, in April-June led by

strong private consumption and public investment.

     Net exports are the main drivers of Japan's sustained but modest economic

recovery in July-September, when a long stretch of rainy days is believed to

have dampened consumer spending, economists said. 

     Economists expect net exports of goods and services -- exports minus

imports -- to have added 0.4 percentage point (forecasts ranged from +0.3 to

+0.6 point) to the total domestic output in the third quarter for the first

positive contribution in two quarters after pushing down Q2 GDP growth by 0.3

percentage point.

     Solid exports of electronics and machinery as well as weaker demand for

smartphones imported from China supported net exports, economists said. 

     The real export index calculated by the Bank of Japan rose 1.9% on quarter

in Q3 for the first rise in two quarters after -0.5% in the second quarter and

+2.8% in the first quarter.

     Capital investment is forecast to have risen a slight 0.2% on quarter for

the fourth straight rise following +0.5% in Q2, with economist forecasts ranging

from -0.7% to +0.7%.

     On the downside, the median economist forecast for private consumption,

which accounts for about 60% of GDP, is -0.3% on quarter for Q3 (ranging from

-0.1% to -0.4%) after +0.8% in Q2, which would be the first drop in seven

quarters.

     The Cabinet Office's Private Consumption Integrated Estimates index, which

is based on both supply- and demand-side data, posted the first month-on-month

rise in four months in August, up 0.4% after falling a revised 0.1% in July.

     But the BOJ's supply-side Consumption Activity Index fell a real 0.6% on a

seasonally adjusted basis for August following a 0.4% rise in July.

     Public investment is forecast to have slumped 2.0% on quarter in Q3

(forecast ranged from -0.9% to -2.8%) after rising 6.0% in Q2.

     Looking ahead, economists expect a moderate economic recovery to continue

in the October-December quarter, led by a possible rebound in private

consumption and solid business investment.

     The average economist forecast for Q3 GDP growth is an annualized 1.34%

rise, down from unusually strong 2.5% gain in Q2, according to the latest

monthly ESP Forecast Survey of 41 economists by the Japan Center for Economic

Research conducted from Sept. 25 to Oct. 2. The survey showed economists

projected GDP growth to continue just above 1% in the coming quarters through

early 2019.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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