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JPY: Japan’s Q3 preliminary GDP preview – Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 12, 2015.

  1. FXStreet_Team

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    FXStreet (Delhi) - Yoshiyuki Suimon, Research Analyst at Nomura, forecasts that Japanese 2015 Q3 real GDP contracted 0.4% q-q annualized (-0.1% q-q).

    Key Quotes

    “Spending and exports have been recovering, but with inventory drawdowns and higher imports depressing GDP, we think GDP growth was in negative q-q territory for the second consecutive quarter in Q3, following the q-q annualized decline of 1.2% in Q2.”

    “We look for real consumer spending to rise 0.4% q-q, a rebound from the 0.7% drop in Q2. This reflects wage increases (including in base pay) and higher bonuses as a result of healthy corporate earnings, as well as an increase in macro wages owing to improvement in the employment environment resulting in an increase in the number of people employed.”

    “Turning to external demand, exports to Asia fell because of the economic slowdown in China, but exports of goods increased in 2015 Q3, driven by growth in exports to the US and Europe.”

    “The ongoing increase in spending by foreign visitors to Japan has also boosted growth in exports of goods and services. Meanwhile, growth in imports as a result of solid domestic demand has dented net exports, but we expect the contribution of external demand as a whole to come in slightly positive at +0.04ppt.”

    “We look for real capex growth in 2015 Q3 to come in at -0.4%, the second consecutive quarterly decline. This may be the result of corporations increasingly taking a wait-and-see stance in view of the increasing risk of a global economic slowdown triggered by the slowdown in China's economy.”

    “However, manufacturers' production forecasts call for an increase in capital goods production in 2015 Q4, pointing to bullish corporate capex demand. Similarly, a bullish stance toward capex was also evident in the BOJ's September Tankan survey. Based on the above, we think the current decline in capex will be a one-time factor.”
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