Yen a bit of a flat line today - tomorrow brings big data though - Q4 GDP

Author: Eamonn Sheridan | Category: News

Q4 GDP data is due from Japan on Wednesday 13 February 2018 ...  an in brief preview from Soc Gen:

We expect 4Q17 real GDP growth to come in at 0.3% qoq (1.1% qoq annualized), marking continued positive growth for the eight quarter in a row after the strong 0.6% qoq observed in 3Q17.
  • Growth over this period is on average 1.75% qoq annualized, and has continued to surpass the potential growth rate, estimated to be around 1.0%.
The drivers of Japan's economy are also likely starting to shift, with domestic demand the primary contributor.
  •  ... A tight labour market combined with high risk asset prices toward the end of the year likely supported consumer sentiment and helped real public consumption to edge up
We expect nominal aggregate wage growth to stay at around 2.0%

Businesses continue to maintain strong capex, as they try to offset the significant labour shortage with capital
  • Conversely, real public investment for 3Q17 will likely ... continuing to decline, as the government continues to move to ratify a supplmentary budget.
  • we expect public investment to start to pick up again, as prepartions for the 2020 Tokyo Olypmic games start to accelerate, and the government implements polices in line with its proposed plan to make the next three year a "period of intense investments".
At the same time, private inventory likely fell ... businesses used up inventories they had built up in 3Q.

We expect real exports to come in at 2.8% qoq and pick up further from the 1.5% qoq observed in 3Q.
  • Continued strength in the global economy has likely helped support Japanese exports. Furthermore, growth in new industrial products such as data sensors and automobile parts related to IoT combined with a pick up in capital goods demand, where Japan has a comparative advantage, has helped raise Japan's share in global trade.
At the same time, imports likely rose by 2.8% qoq in 4Q17, likely supported by a recovery in domestic consumer and business activities.
  • Thus, we expect the contribution of net trade and public demand to come in at -0.1pp and 0.0pp, respectively, and the contribution of domestic private demand to come in at 0.5pp
More to come  on this Wednesday

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