The shock headline this week will be Japanese GDP on Wednesday. The effects of the VAT hike at the start of the quarter are tough to estimate but the consensus is for a 7.0% annualized decline.
The thing is, the variance in forecasts is extremely wide. The high estimate is -1.2% and the low estimate is -9.2%.
The quarter is expected to be a reversal of the 6.7% annualized gain in Q1 as consumers rushed to purchase products ahead of the VAT increase. A larger contraction could leave the BOJ and the government looking for new answers but focus will be on stripping out consumption and focusing on investment and exports.
For more, the WSJ has 5 things to watch in the report.
