| Consensus | Consensus Range | Previous | |
| Quarter over Quarter | 0.3% | 0.2% to 0.4% | 0.1% |
| Annual Rate | 1.3% | 0.8% to 1.5% | 0.2% |
| Year over Year | 0.3% | 0.2% to 0.4% | 0.1% |
Market Consensus Before Announcement
Japan’s revised gross domestic product for the October–December quarter is expected to show improvement, supported by private capital expenditure and corporations’ appetite to build up inventories. Signals of improvements in domestic demand and public spending are also expected to push the country’s economic growth slightly further into positive territory compared with a nearly flat level in the preliminary reading.
The country’s revised Q4 GDP is expected to rise for the first time in two quarters, increasing 0.3 percent on the quarter compared with the preliminary reading of 0.1 percent that was released on February 16. On an annualized basis, the revised GDP is expected to grow 1.3 percent, up from the preliminary estimate of 0.2 percent.
GDP returned to positive territory in Q4 after posting its first contraction in six quarters during the July–September period, when growth was dragged down by weaker-than-expected capital expenditure and soft exports. The downturn was primarily linked to the implementation of stiff U.S. trade tariffs.
Preliminary data showed that public works spending fell more sharply than previously estimated, while U.S. tariffs weighed on exports of autos, metals, and computer chips. Private consumption, which accounts for about 55 percent of GDP, remained sluggish amid elevated costs for daily necessities and declining real wages. Its resilience also faded toward the end of the year as severe winter weather disrupted economic activity. As a result, domestic demand made virtually no contribution to overall output, while external demand, as measured by net exports (exports minus imports), also failed to provide meaningful support to the country’s growth.
In the revised Q4 figures, domestic demand is expected to have contributed +0.3 percentage point to overall GDP, up from 0.0 point in preliminary data. Capital expenditure is forecast to accelerate to +1.2 percent from the preliminary +0.2 percent. Public investment is expected to drop for the third consecutive quarter, but is expected to improve to -0.2 percent from -1.3% in the initial reading.
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.