Sun Aug 13 18:50:00 CDT 2017

Consensus Actual Previous Revised
Quarter over Quarter 0.7% 1.0% 0.3% 0.4%
Q/Q change - SAAR 2.6% 4.0% 1.0%
Year over Year 2.0% 1.3% 1.5%

Japan's GDP grew by 1.0 percent on the quarter in the three months to June according to preliminary estimates, up from 0.4 percent in the three months to March (revised from the previous estimate of 0.3 percent), and also exceeding the consensus forecast of 0.7 percent. This gives an annualised growth rate of 4.0 percent for the three months to June, above the consensus forecast of 2.6 percent.

In year-on-year original terms, GDP advanced by 2.0 percent in the three months to June, compared with an increase of 1.5 percent in the three months to March (revised from 1.3 percent).

The main expenditure components contributing to the 1.0 percent quarter-on-quarter increase in headline GDP were private consumption (0.5 percentage points), private non-residential investment (0.4 percentage points) and public demand (0.3 percentage points). This was offset by a negative contribution of 0.3 percentage points from net exports. Private consumption, private investment and public investment growth all accelerated significantly in the three months to June but exports fell 0.5 percent on the quarter after increasing by 1.9 percent in the three months to March.

Revised GDP estimates for this quarter, incorporating more comprehensive information, will be published next month. If this confirms positive GDP growth in the three months to June, Japan's current economic expansion will have extended to six consecutive quarters, its longest uninterrupted period of positive growth since 2005 and 2006.

Officials at the Bank of Japan expect this "moderate expansion" to continue in coming quarters, supported by accommodative monetary policy, large-scale fiscal stimulus, solid labour market conditions, and an expected boost to investment spending related to the 2020 Olympic games in Tokyo. Officials' median forecast is for real GDP to grow by 1.8 percent in the current fiscal year, revised up from a previous forecast of 1.6 percent.

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

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.