GDP Data Shows Japan In Recession During H2 2023, Weakness Was Broad Based In Q4

Japan Q4 GDP was weaker than expected, with the economy in a recession for the second half of 2023 at least based off the rule of 2 consecutive quarters of negative GDP growth. Annualized q/q GDP fell -0.4% versus a +1.1% forecast. Q3 was also revised lower, to -3.3% (from -2.9%). The q/q sa outcome was -0.1% against a +0.2% forecast and -0.8% prior.

• It's difficult to find positives from the print. Domestic and private demand both fell -0.3% q/q. Private consumption was -0.2%, and both residential and non-residential investment fell in the quarter. The government sector also saw contracted spending.
• Only exports were positive +2.6% q/q, while imports rose 1.7% q/q.
• In nominal terms, Q4 GDP was up 0.3% q/q, versus +0.8% forecast. Most components were either flat or just modestly positive. We had a clear down step from the Q3 pace though.
• At face value the data should diminish BoJ prospects for a near term shift away from NIRP (say at the March meeting). As noted above, weakness in the expenditure components was quite broad based.