MNI DATA PREVIEW: Japan Q1 GDP Seen Revised Up On Solid Capex

     TOKYO (MNI) - Japan's economy likely expanded at a faster than initially

estimated in the January-March quarter, with business investment appearing to be

stronger than initially expected, economists forecast Monday in the wake of a

key government survey.

     The median forecast by six economists for revised Q1 GDP is +0.6% q/q, or

an annualized +2.2%, compared with the preliminary estimate of +0.5% q/q, or an

annualized +2.1%. The forecasts ranged from +0.5% to +0.7% q/q, and +1.9% to

+2.7% annualized.

     Despite the weak real export index and industrial production, Japan's

economy grew in the first quarter, thanks to the strong net exports and public

investment.

     The Cabinet Office will release revised (second preliminary) GDP data for

the January-March quarter at 0850JST on Monday, June 10 (2350GMT on Sunday, June

9).

     --CAPEX UPWARD REVISION

     In January-March, capital investment is forecast by economists to be

revised up to +0.5% q/q from the initial reading of -0.3%, with forecasts

ranging from +0.1% to +0.9%, based on the results of the Ministry of Finance's

survey released on Monday.

     Combined capital investment by non-financial Japanese companies rose 6.1%

on year in the January-March quarter, after rising 5.7% in October-December.

     Capex excluding software gained 6.9% on year in Q1, accelerating from +5.5%

in Q4. Combined capital outlays (excluding software) rose a seasonally adjusted

1.1% in Q1, marking the second straight rise after rising 3.3% in Q4.

     Economists expect private consumption, which accounts for about 60% of GDP,

to be unrevised at -0.1% on quarter. In the preliminary data released last

month, it pushed down the Q1 GDP by 0.0 percentage point.

     The contribution of private-sector inventories to the total domestic output

is forecast to be revised to +0.1 percentage point.

     Net exports of goods and services -- exports minus imports -- are expected

to have made a positive 0.4 percentage point contribution to the total domestic

output, unrevised from the preliminary estimate. Economists also expect public

investment to be revised to +1.1% on quarter in Q1 from +1.5%. Forecasts ranged

from +0.9% to +1.2%.

     --SLOWER Q2

     Going forward, economists expects Japan's economy to slow in Q2, hit by

weak exports and industrial production caused by the slowing Chinese economy and

the heightened uncertainty over the global demand.

     The average economist forecast for Q2 GDP growth is annualized at 1.30%,

according to the latest monthly ESP Survey of 38 economists by the Japan Center

for Economic Research conducted from April 26 to May 9.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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