JP: GDP


Tue May 15 18:50:00 CDT 2018

Consensus Actual Previous Revised
Quarter over Quarter 0.0% -0.2% 0.4% 0.1%
Q/Q change - SAAR 0.0% -0.6% 1.6% 1.6%
Year over Year 0.9% 2.0% 1.8%

Highlights
Japan's GDP fell 0.2 percent on the quarter in the three months to March according to preliminary estimates, down from growth of 0.1 percent in the three months to December, and weaker than the consensus forecast of zero growth. This gives an annualised decline of 0.6 percent for the three months to March, again weaker than the consensus forecast of zero growth, and down sharply from 1.6 percent in the three months to December.

In year-on-year original terms, GDP advanced by 0.9 percent in the three months to March compared with an increase of 1.8 percent in the three months to December.

Weaker GDP growth in the three months to March was mainly driven by stagnant consumer spending and a decline in business investment. Household consumption was flat on the quarter after an increase of 0.2 percent in the three months to December, while private non-residential investment spending fell 0.1 percent on the quarter after an increase of 0.6 percent previously. Public demand was also flat on the quarter after dropping 0.1 percent previously, while the contribution to headline GDP growth from net exports improved from negative 0.1 percentage points to positive 0.1 percentage points.

Revised GDP estimates for this quarter, incorporating more comprehensive information, will be published next month. If this confirms negative GDP growth in the three months to March, this will be the first contraction in activity in just over two years.

Today's GDP report represents a challenge to the recent assessment made by officials at the Bank of Japan that the Japanese economy will "expand moderately" in coming quarters. Officials' growth forecasts were revised higher last month in response to recent positive activity data, with the median forecast for real GDP growth now at 1.6 percent for the current fiscal year, up from 1.4 percent previously, and 0.8 percent for next fiscal year, up from 0.7 percent previously.

Definition
Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy.

Description
Gross domestic product is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.

The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.