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GDP Contracts 2.3% YoY In Q1


Resumes Its Upleg

     TOKYO (MNI) - Japan's economy is expected to post the first growth in two
quarters in the October-December period, thanks to higher capital investment and
private consumption, private economists forecast.
     The median forecast by eight economists for preliminary Q4 GDP is for a
0.3% rise on quarter, or an annualized +1.2%, compared with second preliminary
estimate of -0.6% q/q, or an annualized -2.5% for the third quarter.
     Forecasts ranged from +0.1% to +0.5% q/q, or +0.3% to +2.0% at an
annualized pace.
     The Cabinet Office will release preliminary GDP data for the
October-December quarter at 0850 JST on Thursday, Feb. 14 (2350 GMT on
Wednesday, Feb. 13).
     Economists expect that Japan's economy was boosted by the recovery of
capital investment and private consumption in the fourth quarter, bouncing back
from a weaker Q3 that saw a a string of natural disasters.
     But the expected economic growth in the fourth quarter will not be enough
to fully offset the contraction in the third quarter, due to the continued weak
net exports, economists said.
     Economists expect private consumption, which accounts for about 60% of the
GDP, to have risen 0.6% on quarter, compared with -0.2% in the third quarter.
Forecasts ranged from +0.4% to +0.9%.
     Capital investment during the fourth quarter was expected to have risen
2.0% on quarter, compared with -2.8% in the third quarter. Forecasts ranged from
+1.5% to +2.9%.
     Corporate demand for capital investment, including labor-saving investment,
remains solid as firms are suffering from the labor shortage.
     But the continued uncertainties over global demand are clouding the outlook
for capital investment in fiscal 2019 as some firms are putting off the
implementation of capital investment.
     Bank of Japan economists are focused on capital investment plans in fiscal
2019 through the BOJ March Tankan business sentiment survey due out April 1.
     The contribution of private-sector inventories to the total domestic output
is forecast to be -0.1 percentage point vs. 0.0% in the third quarter.
     Net exports of goods and services -- exports minus imports -- are expected
to have made a negative 0.4 percentage point contribution to the total domestic
output, compared with -0.1 percentage point contribution in the third quarter.
     The expected drop of net exports during the fourth quarter will be the
third straight quarterly drop.
     Economists also expect public investment to have fallen 1.0% q/q in Q4,
slowing form -2.0% in the third quarter.
     Going forward, economists expects Japan's economy to grow moderately in Q1,
but they voiced concern over its downside risk amid the lingering uncertainties
over the global economy.
     The average economist forecast for Q1 GDP growth is annualized at 1.37%,
according to the latest monthly ESP Survey of 37 economists by the Japan Center
for Economic Research conducted from Dec. 27, 2018, to Jan. 8.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
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