MNI: Japan's Q3 GDP To Rise 0.3% Q/Q; Annualised +1.2% -Survey

Japan's economy is expected to have expanded for a fourth straight quarter over the July-September period as solid capital investment offset weaker private consumption, economists predicted.

Economists are looking for preliminary Q3 GDP to grow 0.3% quarter-on-quarter, or an annualised 1.2%. This follows growth of 0.9% q/q, or an annualized 3.5% in the prior quarter, which was boosted by strong private consumption and capex. Forecasts for growth ranged between 0.2% and 0.6% q/q, and 0.7% to 2.4% at an annualized pace.

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

Economists expect private consumption to have been hit by surges in Covid-19 cases, although the government didn’t restrict economic activities.

Economists expect private consumption, which accounts for about 60% of GDP, to rise 0.3% q/q for the fourth straight rise, slowing from growth of 1.2% in the second quarter. Forecasts for growth ranged between 0.2% and 0.6%.

Capital investment during the third quarter is expected to have risen 2.0% q/q following solid capex in the second quarter (it grew 2.0% q/q in Q2), for the second straight rise. Forecasts ranged between growth of 1.6% and 2.7%.

Net exports of goods and services - exports minus imports - are expected to have made a negative 0.3 percentage point contribution to total domestic
output, after rising 0.1 percentage point contribution in the second quarter.

Economists expect Japan’s economy to grow in the fourth quarter, but the pace of growth is expected to be modest as consumer spending will be weighed down by high prices caused by the weak yen and the rise in import prices.

Bank of Japan economists expect Japan’s economy to continue recovering as the impact of Covid-19 and supply-side constrains wane.

They also expect exports and production to be somewhat hit by slower global growth caused by rate hikes. Exports and production are likely to remain on an uptrend with support from high levels of order backlogs for automobile and capital goods.

The average economist forecast for Q4 annualised GDP growth is 2.84%, according to the latest monthly ESP Survey of 36 economists by the Japan Center
for Economic Research conducted from September 27 to October 4.