Friday, May 17, 2019 - 01:31

MNI DATA PREVIEW: Japan Q1 GDP Seen Lower On Capex, Spending

TOKYO (MNI) - Japan's economy is expected to post a contraction in the January-March period, hit by weak capital investment and private consumption.

Economists are looking for preliminary Q1 GDP lower by 0.1% fall on quarter, or an annualized -0.2%. That compares with the second preliminary estimate of +0.5% q/q, or an annualized +1.9% for the fourth quarter of 2018.

Forecasts ranged from -0.1% to +0.4% q/q, or -0.5% to +1.4% at an annualized pace.

The Cabinet Office will release preliminary GDP data for the January-March quarter at 0850 JST on Monday, May 20 (2350 GMT on Sunday, May 19).


Economists expect that Japan's economy was hit by weak capital investment and private consumption in Q1 amid slowing demand and uncertainties over the global economy, reversing from gains seen in Q4, although they expect weak private demand to have been partly offset by firm net exports on the back of weak imports.

Economists expect private consumption, which accounts for about 60% of the GDP, to have fallen 0.1% on quarter, compared with +0.4% in the fourth quarter. Forecasts ranged from -0.2% to +0.1%.

Capital investment during the first quarter is expected to have fallen 2.2% q/q due to the cautious corporate stance from weak global demand, down from +2.7% in Q4. Forecasts ranged from -3.0% to +0.6%.

Capital investment by major manufacturers was weak in Q1 on the back of the slowing China's economy. Some companies are putting off the implementation of capex on the back of the continued uncertainties.

However, the Bank of Japan's March Tankan survey showed solid capital investment plans in the current fiscal year, although the plans will be revised in June.

The contribution of private-sector inventories to the total domestic output is forecast to be unchanged from the 0.0% in Q4%.


Net exports of goods and services -- exports minus imports -- are expected to have made a positive 0.3 percentage point contribution to the total domestic output, reversing from -0.3 percentage point contribution in the fourth quarter.

The expected rise of net exports during Q1 will be the first pick-up in four quarters. Economists also expect public investment to have risen 1.4% q/q, reversing from -1.7% for the first rise in seven quarters.

Going forward, economists expects Japan's economy to return to a moderate recovery path in Q2 based on a capital investment boost, but they voiced concern over its downside risk amid uncertainties a strength of the Chinese economic recovery.

The average economist forecast for Q1 GDP growth is annualized at -0.06%, according to the latest monthly ESP Survey of 36 economists by the Japan Center for Economic Research conducted from March 26 to April 2.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:

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