MNI DATA PREVIEW: Japan Q2 GDP Likely Up On Capital Investment

Japan's economy in the April-June quarter likely expanded for the first time in two quarters thanks to a rebound of capital investment from the previous quarter, economists predicted.

Economists pointed to higher expected private consumption from the previous quarter but still negative, weighed down by the state of emergency to combat the spread Covid-19. Japan's fiscal year starts April 1, or Q2 on the calendar.

Preliminary Q2 GDP likely rose by 0.2% on quarter, or an annualised +0.8% following a -1.0% q/q, or an annualized -3.9% in the first quarter.

Forecasts ranged from 0.0% to +0.4% q/q, or -0.1% to +1.7% at an annualized pace.

DATA DUE NEXT WEEK

The Cabinet Office will release preliminary GDP data for the April-June quarter at 0850 JST on Monday, August 16 (2350 GMT on Sunday, August 15).

The expected GDP for Japan is much lower than the U.S. (annualised +6.5%) and the eurozone (annualised +8.3%) due to slow vaccination rates and continued lockdowns in several prefectures, including Tokyo.

HIGHER CAPEX

Capital investment during Q2 likely rose 2.9% q/q on the back of solid demand caused by steady profits following weak capex in the first quarter (-1.2% q/q in Q1). Forecasts ranged from -0.4% to +3.3%.

Net exports of goods and services -- exports minus imports -- are expected at a negative 0.1 percentage point to total domestic output, after falling 0.2 percentage point in the previous quarter.

Going forward, economists expect Japan's economy to recovery, but with weak momentum on the back of the state of emergency.

For the July-September quarter, economists forecast GDP growth at an annualised +4.90%, according to the latest monthly ESP Survey of 37 economists by the Japan Center for Economic Research conducted from June 28 to July 5.