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Japan: FY15 GDP forecast revised up slightly while FY16 forecast lowered - Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 17, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at Nomura, have revised up their forecast for FY15 real GDP growth from +0.8% when we last revised our forecasts (on 30 October) to +0.9%.

    Key Quotes

    “Real GDP growth for Jul-Sep 2015 came in at -0.8% q-q annualized, undershooting the market outlook and our estimate. However, we have raised our forecast for FY15 GDP growth in view of (1) the upward revision to the Apr-Jun growth figure from -1.2% in the previous announcement to -0.7% and (2) our view that real exports, which grew more than expected in Jul-Sep, will gradually increase in future too. For FY16, we have lowered our real GDP growth forecast from +1.6% previously to +1.5%. This reflects a slight downward revision to our outlook for private consumption owing to a cut to our assumptions for wage growth. We have retained our forecast for real GDP growth in FY17.”

    We expect gradual recovery in economy from Oct-Dec: Although real GDP growth itself was in negative territory q-q in Jul-Sep 2015 owing to inventory corrections, there were also some positive economic signs such as a move into recovery for private consumption and exports. We expect a gradual recovery in the economy from Oct-Dec. For FY16, we look for growth in real private consumption to rise to +1.8%, partly on a boost from rush demand ahead of the implementation of the consumption tax hike assumed to be taking place in April 2017.”

    Continuing to focus on risk of deterioration in external environment: Meanwhile, we expect private-sector capital expenditure to be in positive q-q territory from Oct-Dec. Meanwhile, real exports are likely to continue on a moderate recovery track, supported by solid economic conditions in industrialized economies and a recovery in emerging market economies. However, there remain strong uncertainties regarding the external environment, including the Chinese economy, and we think these uncertainties are the main risk factors for Japan's economy.”
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