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MNI DATA PREVIEW: Japan Q3 GDP Seen Slowing But Capex Higher

MNI (London)
     TOKYO (MNI) - Japan's GDP growth is expected to have slowed in Q3 from the
previous quarter, weighed by a negative contribution from net exports, although
strong consumer spending ahead of the October sales tax hike will keep the
economy in the black, according to economists surveyed by MNI.
     Strong capital investment on the back of the continued strong domestic
demand is also helping stave off a deeper slowdown and economists are looking
for preliminary Q3 GDP to grow by 0.2% q/q, or an annualized +0.8%, for the
fourth straight quarterly rise. That compares with a second read of +0.3% q/q,
or an annualized +1.3% for the second quarter of 2019.
     Economist forecasts ranged from +0.1% to +0.5% q/q, or +0.2% to +1.9% y/y.
     The Cabinet Office will release preliminary GDP data for the July-September
quarter at 0850 JST on Thursday, Nov. 14 (2350 GMT on Wednesday, Nov. 13).
     Economists see private consumption, which accounts for about 60% of the
GDP, to have grown 0.6% q/q following a 0.6% gain in Q2. Forecasts ranged from
-0.2% to +0.7%.
     Capital investment is expected to have risen by 1.1% q/q as
non-manufacturers look to continue productivity gains amid ongoing labor
shortages. Forecasts ranged from +0.5% to +2.4%.
     Manufacturers capex is expected to be hit by the slowdown in overseas
economies but capex, although the BOJ says the impact of the global slowdown on
domestic demand is limited.
     The BOJ's September Tankan survey showed revised capital investment plans
by both major and smaller firms above the historical average, supporting the
view that the virtuous cycle from profits to spending was still in place.
     Net exports of goods and services -- exports minus imports -- are expected
to have made a negative contribution of 0.1% to the total domestic output,
slowing from -0.3% in Q2. Exports during the third quarter are expected to have
fallen but imports were stronger, giving a negative contribution.
     Economists also expect public investment to have risen 1.8% q/q, compared
with +1.8% in Q2.
     Looking ahead, private consumption is seen falling in the wake of the
post-tax hike drop, with the economy expected to contract in Q4.
     The average economist forecast for Q3 GDP growth is annualized at 0.68%,
according to the latest monthly ESP Survey of 36 economists by the Japan Center
for Economic Research, conducted from September 25 to October 2.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: MAJDS$,M$A$$$,M$J$$$]
MNI London Bureau | +44 203-865-3812 |

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