The preliminary reading on Japanese economic growth for the April to June quarter

  • Due on Friday morning Japan time (2350GMT Thursday #9 August 2018 )

Estimates as follows:

  • GDP (seasonally adjusted) for Q2, preliminary, q/q: expected 0.3%, prior -0.2%
  • GDP Annualized (seasonally adjusted) for Q2, preliminary y/y: expected 1.4%, prior -0.6%
  • GDP Nominal (seasonally adjusted) for Q2, preliminary q/q: expected 0.2%, prior -0.4%
  • GDP Deflator y/y for Q2, preliminary: expected 0.0%, prior 0.5% (deflator is an inflation measure)
  • GDP Consumer Spending y/y for Q2, preliminary q/q, expected is 0.2%, prior was -0.1%
  • GDP Business Spending y/y for Q2, preliminary q/q: expected 0.6%, prior was 0.3%

A quickie preview, this via Nomura:

We expect Q2 (April-June) real GDP growth of 1.4% q-o-q annualized (+0.3% q-o-q).

  • This would be the first quarter-on-quarter growth in two quarters (since Q4 2017).
  • We think exports and private-sector demand continued to grow in Q2.

We think consumer spending recovered in Q2 and helped to drive overall growth in GDP, having weakened in Q1 due to the poor weather.

We also think capex continued to grow at a moderate pace.

  • The June BOJ Tankan pointed to strong appetite for capex in FY18, suggesting continued firm demand for labor-saving technologies and strong construction demand in major cities in Japan.

We think exports continued to grow in Q2 due to the solid US economy.

  • That said, we think slower economic growth in Europe since the start of the year, coupled with economic slowdown in emerging markets, has caused Japanese export growth to lack momentum.
  • Nevertheless, we expect a fairly strong contribution from overseas demand, as imports likely fell in Q2 on the heels of weak domestic demand in Q1.

We expect gradual growth overall, albeit not to the same extent as through mid-2017, when GDP grew considerably more than the potential growth rate.

We expect the global economy to gradually decelerate while avoiding a sharp slowdown, and look for the Japanese economy to continue growing albeit with little sign of an acceleration. We think investors should be aware of additional downside risks to overseas demand in the shape of US trade policy and a sharp slowdown in emerging economies.