16 Feb 2015
Japan out of recession, GDP growth to accelerate in Q1 15 – Danske
FXStreet (Barcelona) - Flemming J. Nielsen, Senior Analyst at Danske Bank, reviews Japan’s GDP release, and further forecasts Japan’s growth to accelerate in Q1 15 to 0.8% qoq.
Key Quotes
“Japan’s GDP expanded 0.6% q/q in Q4 14 (consensus: 0.9% q/q, Danske Bank Markets: 1.1% q/q) after contracting 0.6% q/q in Q3 (revised down from -0.5% q/q) and 1.7% q/q in the previous two quarters.”
“While growth was weaker than expected in Q4, it nonetheless confirms that Japan is now recovering after the technical recession in Q3 and Q4 in the wake of the consumption tax hike in April. For 2014 as a whole, Japan’s GDP growth eased to 0.0% from 1.6% in 2013.”
“Looking at the details, domestic demand was substantially weaker than expected in Q4.”
“Private consumption only increased 0.3% q/q (consensus: 0.8% q/q, Danske Bank Markets 0.7% q/q) after increasing 0.3% q/q in Q3.”
“Business investments only increased 0.1% q/q (consensus: 1.0% q/q, Danske Bank Markets: 1.2% q/q) after declining 0.1% q/q in the previous quarter.”
“On a positive note, exports increased 2.7% q/q after increasing 1.5% q/q in Q3 and overall export performance was strong for the whole of 2014 (up 8.3%). Hence, there are tentative signs that the weaker yen has finally started to benefit Japan’s exports.”
“Nonetheless, net exports only added 0.2 percentage points to GDP growth in Q4 due to relatively strong import growth.”
“Leading indicators in Japan are relatively strong at the moment and the outlook for growth in Q1 15 is now a bit stronger.”
“We expect GDP growth to accelerate to 0.8% q/q in Q1 15 and for 2015 as a whole we maintain our forecast of 1.2% GDP growth.”
Key Quotes
“Japan’s GDP expanded 0.6% q/q in Q4 14 (consensus: 0.9% q/q, Danske Bank Markets: 1.1% q/q) after contracting 0.6% q/q in Q3 (revised down from -0.5% q/q) and 1.7% q/q in the previous two quarters.”
“While growth was weaker than expected in Q4, it nonetheless confirms that Japan is now recovering after the technical recession in Q3 and Q4 in the wake of the consumption tax hike in April. For 2014 as a whole, Japan’s GDP growth eased to 0.0% from 1.6% in 2013.”
“Looking at the details, domestic demand was substantially weaker than expected in Q4.”
“Private consumption only increased 0.3% q/q (consensus: 0.8% q/q, Danske Bank Markets 0.7% q/q) after increasing 0.3% q/q in Q3.”
“Business investments only increased 0.1% q/q (consensus: 1.0% q/q, Danske Bank Markets: 1.2% q/q) after declining 0.1% q/q in the previous quarter.”
“On a positive note, exports increased 2.7% q/q after increasing 1.5% q/q in Q3 and overall export performance was strong for the whole of 2014 (up 8.3%). Hence, there are tentative signs that the weaker yen has finally started to benefit Japan’s exports.”
“Nonetheless, net exports only added 0.2 percentage points to GDP growth in Q4 due to relatively strong import growth.”
“Leading indicators in Japan are relatively strong at the moment and the outlook for growth in Q1 15 is now a bit stronger.”
“We expect GDP growth to accelerate to 0.8% q/q in Q1 15 and for 2015 as a whole we maintain our forecast of 1.2% GDP growth.”