Reuters are very quick off the market with some analyst responses to the Japanese GDP data.

In summary:

  • Private consumption down a lot
  • Capital spending was poor
  • Inventories piled up
  • Situation looks worse than GDP figures show

Looking for a bounce in Q3 ... but not expecting high growth

  • Summer wage bonuses & easing in price increases for groceries to underpin private consumption
  • External demand will likely recover ... steady U.S. industrial output, signs the Chinese economy is bottoming out

BOJ

  • Will be forced to cut its growth projections for this fiscal year
  • Likely to stand pat on policy in the coming months unless downward pressures on prices strengthen
  • If the economy in Q3 turns out weak ... chance the BOJ will implement more easing

Government may compile a supplementary budget to prop up the economy if private consumption fails to pick up in Q3