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MNI: Japan Q3 GDP Fell 0.3% Q/Q; Annualised Down 1.0%-Analysts

Japan's economy for the July-September period contracted for the first time in two quarters, hit by weaker private consumption, exports and industrial production caused by supply disruptions, economists predicted.

GDP likely fell -0.3% on quarter, or an annualised -1.0%, according to the median forecast, in the wake of the state of emergency to combat the pandemic and weaker capital investment, compared to Q2 of the calendar year. Forecasts ranged from -0.5% to +0.1% q/q, or -2.2% to +0.6% at an annualised pace. The quarterly growth compares to a U.S. annualised pace of +2.0%) and +9.1% for the eurozone.

OUTLOOKS

But the decline is expected to be reversed into next year. Last week, the Bank of Japan upgraded its GDP forecast for the fiscal year started April 2022 to +2.9% from +2.7% on expectations of an economic rebound,: see: MNI BRIEF: BOJ Lifts FY22 GDP View, CPI Unchanged In Outlook.

Going forward, economists expect Japan's economy to recover in the fourth quarter as the state of emergency was lifted on Oct. 1 and as private consumption is recovering, albeit slowly.

See: MNI DATA SURVEY: Japan Preliminary GDP For July-September.

The average economist forecast for Q4 GDP growth is annualized at +4.60%, according to the latest monthly ESP Survey of 37 economists by the Japan Center for Economic Research conducted from September 27 to October 4.

LOWER CAPEX, CONSUMPTION, EXPORTS

Private consumption accounts for about 60% of GDP, and likely eased 0.6% q/q for the first drop in two quarters. Forecasts ranged from -0.3% to -1.0%. Capital investment during the third quarter is also expected to have dipped 0.5% q/q, also the first drop in two quarters. Forecasts ranged from -2.3% to +0.4%.

In both cases, lockdowns in Japan reduced spending for services, particularly restaurants, bars and accommodations, while supply chain disruptions weighed on spending plans by manufacturers, automobile makers in particular, see: MNI INSIGHT: Auto Output Snags Lead Japan Q3 Factory Gauge Down.

Net exports of goods and services -- exports minus imports -- are expected to have eased -0.1 percentage point to domestic output, after -0.3 percentage point in the second quarter.

The Cabinet Office will release preliminary GDP for the July-September quarter at 0850 JST on Monday, November 15 (2350 GMT on Sunday, November 14).

MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
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MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
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