EWJV - Japan Avoids A Technical Recession But GDP Disappoints

2024-03-11 17:50:00 ET

Summary

• Japan's fourth quarter GDP was revised up to avoid a technical recession, and yet it still missed market expectations.
• We believe sluggish private consumption should remain a concern for the BoJ in order to change its policy direction.
• We therefore see a higher chance of a policy change in April than in March.

By Min Joo Kang

Strong exports and non-residential investment led the fourth quarter growth

Japan’s fourth quarter GDP for 2023 was revised up to 0.1% quarter-on-quarter seasonally adjusted from the preliminary -0.1%. So, the country avoided a technical recession, but today’s reading was weaker than the market consensus of 0.3%. As suggested by earlier capital spending data, solid non-residential investment growth of 2.0% was the main driver behind the rebound (vs. -0.1% preliminary, 2.4% market consensus). But private consumption remained sluggish, contracting by 0.3% (vs. 0.2% preliminary and market consensus), a key reason for the modest growth. Exports rose 2.6%, mainly due to strong services exports (11.3%) related to one-off royalty income....

For further details see: