MNI: Japan's Q3 Revised GDP Seen Little Changed; Higher Capex

Japan's economy contracted at slower pace than initially estimated in the July-September quarter as capital investment was expected to be stronger than first estimated, economists predicted in the wake of a key government survey.

The median forecast by six economists for revised Q3 GDP is -0.3% q/q, or an annualized -1.1%, compared with the preliminary estimate of -0.3% q/q, or an annualized -1.2%. The forecasts ranged from -0.1% to -0.3% q/q, and -0.4% to -1.2% annualized.

The Cabinet Office will release revised (second preliminary) GDP data for the July-September quarter at 0850 JST on Thursday, December 8 (2350 GMT on Wednesday, December 7).

In July-September, capital investment is forecast by economists to be revised up to growth of 1.7% q/q from the initial reading of 1.5% q/q, with forecasts ranging from 1.5% to 2.4%, based on the results of the Ministry of Finance's survey released on Thursday.

Combined capital investment by non-financial Japanese companies, excluding software, rose 2.7% q/q in the third quarter of 2022, up from 2.3% in Q2, a quarterly revised survey released by the MOF Thursday showed.

The MOF survey, based on the demand side, is the key to calculating Q3 GDP revisions and indicated that capex will be revised up from preliminary estimate of growth of 1.5%.Economists expect public investment to be revised to growth of1.5% q/q in Q3 from 1.2% in Q2.

Private consumption is forecast by economists to be unrevised at +0.3% on quarter. The contribution of private-sector inventories to the total domestic output is forecast to be unrevised at -0.1 percent point.

Net exports of goods and services -- exports minus imports -- are expected to have made a negative 0.7 percentage point contribution to the total domestic
output, unchanged from the preliminary estimate.

Economists expect Japan's economy to grow in the fourth quarter of 2022 as economic activity and inbound tourists rebound, although some domestic spending will be hurt by high living costs.

The average economist forecast for Q4 GDP growth is annualized at 2.14%, according to the latest monthly ESP Survey of 35 economists by the Japan Center for Economic Research conducted from October 26 to November 2.