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REPEAT: MNI: ANALYSTS: Japan Q1 GDP To Be Revised Up on Capex

Repeats Story Initially Transmitted at 11:16 GMT Jun 1/07:16 EST Jun 1
     TOKYO (MNI) - Japan's economic contraction in the first quarter of 2018
will be revised up slightly from the initial estimate as business investment
appears to be firmer than initially reported, economists forecast Friday
following the release of a key government survey.
     The Cabinet Office will release revised (second preliminary) GDP data for
the January-March quarter at 0850 JST on Friday, June 8 (2350 GMT June 7).
     The median forecast by six economists for revised Q1 GDP is -0.1% on
quarter, or an annualized -0.5%, compared with the first preliminary estimate of
-0.2% q/q, or an annualized -0.6%. The forecasts ranged from -0.2% to +0.1% q/q,
or -0.7% to +0.2% at an annualized pace.
     According to the preliminary data, Japan's modest economic recovery took a
breather in the first quarter of 2018 as the severe winter weather and high
fresh food and fuel prices hurt consumption, mitigating the positive effect of a
slight gain in net exports.
     It was the first contraction in nine quarters, since Q4 of 2015, when it
shrank 0.3% on quarter, or 1.2% on an annualized basis, hit by sluggish consumer
spending amid a slow wage recovery and uncertain growth prospects at the time.
     Capital investment is forecast by economists to be revised up to +0.2% on
quarter from the initial reading of -0.1%, with forecasts in a range of +0.1% to
+0.4%, following Friday's release of the Ministry of Finance's quarterly survey
of major companies.
     The contribution of private-sector inventories to the total domestic output
is forecast to be unrevised at -0.1 percentage point, as reported last month.
     Private consumption, which accounts for about 60% of GDP, is projected to
be revised up to be a slight rise (+0.0%) on quarter from the preliminary
estimate of a slight drop (-0.0%) on quarter in the January-March quarter. It
pushed down the Q1 GDP by -0.0 percentage point.
     On the downside, economists expect public investment to be revised down to
a drop of 0.2% on quarter in Q1 from a slight gain (+0.0%) in the initial
reading. The forecasts ranged from -0.4% to +0.1%.
     The contribution of net exports -- exports minus imports -- to the total
domestic output is expected to be unrevised at +0.1 percentage point. It was the
first positive contribution in two quarters after it pushed down Q4 GDP growth
by 0.1 percentage point.
     Capital investment by non-financial Japanese firms rose 3.4% on year in the
January-March period, posting the sixth straight q/q rise, but the pace of
increase decelerated from +4.3% in October-December, the Ministry of Finance
quarterly survey called the Financial Statements Statistics of Corporations by
Industry showed.
     Investment in equipment excluding software gained 2.1% on year in Q1, also
slowing from +4.7% in Q4.
     On quarter it rose to Y13.4 trillion, up 28.5% from Y10.5 trillion in Q4.
The pace of increase is similar to the temporary estimate of +26.4% for
demand-side unadjusted capex provided by the Cabinet Office in the preliminary
Q1 GDP data released on May 16.
     The MOF survey based on the demand side is the key to calculating revisions
to Q1 GDP due out on June 8. Capex in preliminary GDP is based solely on supply
side data.
     Going forward, economists expect Japan's economic growth to return to an
above-potential rate of over 1% annualized in the second quarter and stay around
that level until it moves up to 2% in Q3 of 2019, just before the sales tax hike
to 10% from 8% planned for October 2019.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email:

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