— See Separate Tables For Details Of Individual Forecasts

TOKYO (MNI) – Japan’s gross domestic product in April-June is
expected to have posted the second straight quarterly rise, up a real
0.6% q/q, or an annualized +2.5%, backed by consumption and fiscal
spending, according to the median forecast by economists surveyed by
MNI.

But the pace of growth is expected to have slowed, compared with Q1
when GDP rose an annualized 4.7% q/q due to leap-year effects.

The Cabinet Office will release the Q2 GDP data at 0850 JST on
Monday, Aug. 13 (2350 GMT Sunday, Aug. 12).

Personal consumption, the largest component of GDP, is expected to
have risen 0.3% q/q in Q2, posting gains for five quarters in a row
after +1.2% in Q1 and +0.7% in Q4 of 2011, thanks to the government’s
subsidies for buying low-emission vehicles.

New car sales showed robust gains in Q2, up 92.0% y/y in April,
+66.3% in May and +40.9% in June.

Public demand is another driver of Q2 growth, up 0.8% q/q on
programs to rebuild the northeastern areas hit by the March 2011
earthquake disaster. It would be the third straight rise after +1.3% in
Q1 and +0.1% in Q4.

Public outlays for reconstruction of the disastered areas have
totaled around Y19 trillion, equivalent to about 4% of Japan’s nominal
GDP.

Business investment, a key component of private demand, appeared to
have risen 0.7% q/q, the first gain in two quarters, after -2.1% in Q1
and +5.2% in Q4.

Meanwhile, net exports, which pushed up GDP by 0.1 percentage point
in Q1, are expected to have made on contribution to the Q2 GDP.

The Q2 GDP is expected to show higher growth than the Japan’s
potential growth which is estimated to be about 0.5%, but economists are
not necessarily optimistic about the prospects in Q3 onward as funding
for the government subsidies for greener cars will be used up in August.

Yoshimasa Maruyama, chief economist at Itochu Economic Research
Institute, forecast that personal consumption will lose steam in Q3 and
drop in the final quarter of this year.

Ryutaro Kono, chief economist at BNP Paribas, agreed, saying, “The
pace of growth in GDP will clearly decelerate in the second half of this
fiscal year, but the economy is unlikely to enter a downturn phase.”

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4838 **

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