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TOKYO (MNI) - Japan's economy is expected to have contracted in Q1, weighed
down by the spreading coronavirus weighing on both capital investment and
consumer demand, according to economists surveyed by MNI.
The expected contraction will be the second straight quarterly contraction.
Exports remained weak during the period, coming after net exports contributed to
weakness in the fourth quarter of 2019.
Economists are looking for preliminary Q1 GDP to fall 1.3% q/q, or an
annualized 5.0% dip. That compares with the second preliminary estimate of -1.8%
q/q, or an annualized -7.1% for the fourth quarter of 2019.
Forecasts ranged from -0.9% to -1.7% q/q, or -3.5% to -6.5% annualized.
--LOWER CAPEX, SPENDING
Economists said that Japan's economy was hit by weak domestic demand, and
they expect private consumption, which accounts for about 60% of the GDP, to
have fallen 1.7% q/q following -2.8% in the four quarter. Forecasts ranged from
-0.5% to -2.5%.
Capital investment during the first quarter is expected to have fallen 1.4%
q/q in the wake of the weak spending by manufacturers amid sluggish overseas
demand. Forecasts ranged from -0.5% to -3.3%.
Prime Minister Shinzo Abe on April 7 declared a state of emergency and
instructed people not to go out, corporate and household sentiment deteriorated
sharply. PM Abe will likely extend the period of a statement of emergency.
Net exports of goods and services -- exports minus imports -- are expected
to have made a positive 0.0 percentage point contribution to the total domestic
output, falling from +0.5 percentage point contribution in the fourth quarter.
Exports during the first quarter had fallen in the wake of weak demand in
China that was strongly dragged down by the coronavirus.
Private economists expect Japan's economy in the second quarter to be
severer than that of the first quarter as the major economic components, such as
private spending, exports and capital investment, are deteriorating.
Japan's economy is expected to contract by an annualized 21.7% during the
April-June quarter, its worst showing since the end of World War II, as the
coronavirus crisis sends business and consumer activity into an unprecedented
stall, a recent Nikkei survey showed.
--MNI London Bureau; tel: +44 203-586-2225; email: email@example.com