Japan: GDP growth to slow in latter part of year - Nomura

Analysts at Nomura expect Japanese exports to continue to remain weak in Jul-Sep and in addition expect growth to slow in the latter part of the year.

Key Quotes

“Our focus is on the Chinese economy, which has been showing signs of slowing. We expect it to be stable until the end of the year with increased fiscal stimulus.”

“Capital expenditures expanded solidly in Apr-Jun and we expect growth in capex to slow in the second half of the year along with the weakness in exports, but to hold relatively firm.”

“Capex in Japan grew eight years through FY17. We expect further growth despite the cyclical maturity because we expect support from investment demand for labor-saving software and equipment.”

“We maintain the view that low household spending growth will continue as low growth in per-capita wages weighs on expectations for sustained income growth.”

“Overall, the growth pattern in Japan tends to be dictated by exports, and we thus expect growth to slow in the latter part of the year. Thereafter, we envision a pattern marked by stable economic activity in China, and recoveries in exports and capex, but with the global economy in a slowdown phase, we think growth in Japan is likely to slow.”