Private consumption and capital investment drove a return to growth in Japan in Q2, economists say.
Japan's economy grew for the first time in two quarters in the April-June period as private consumption and capital investment recovered, economists predict.
Preliminary data at 0850 JST on Aug. 15 (2350 GMT, Aug. 14) should show Q2 GDP higher by 0.7%, or an annualised +2.9%, up from -0.1% q/q or 0.5% y/y in the first quarter of 2022. Forecasts ranged from +0.3% to +0.9% q/q, and from an annualised +1.4% to +3.6%.
Private consumption, which accounts for about 60% of GDP, should expand by 1.1% q/q, a third straight quarterly rise and up from +0.1% in the first quarter, after the government lifted quasi-emergency pandemic measures. Forecasts ranged from +0.7% to +1.5%.
Capital investment should have been boosted by solid corporate profits, posting the first rise in two quarters to gain 1.0% after declining by -0.7% in Q1. Forecasts ranged from +0.2% to +2.2%.
Net exports of goods and services are expected to have made a positive 0.1 percentage point contribution to total domestic output, after a 0.4-percentage-point contribution in the first quarter.
Going forward, economists expect more growth in the third quarter as consumer spending, including services spending, recovers despite the rise in Covid-19 cases.
Both exports and industrial production are also recovering, but face supply-side constraints, and slower global growth as predicted by the International Monetary Fund is clouding an otherwise strong outlook for production and exports.
The average economist forecast for Q3 GDP growth is an annualised +3.38%, according to the latest monthly ESP Survey of 36 economists by the Japan Center for Economic Research conducted from June 30 to July 7.