16 Feb 2015
Japan's Q4 GDP preview: Heading toward recovery - Nomura
FXStreet (Bali) - Nomura Economists are looking for Japan's Q4 real GDP growth of 4.8% q-o-q annualized, which should signal that the economy is heading toward recovery, they say.
Key Quotes
"We think the OctDec 2014 real GDP figures will reveal growth of 4.8% q-o-q annualized (+1.2% q-o-q). We think strong growth in Oct-Dec would suggest the Japanese economy is steadily heading toward a recovery after declines of 6.7% q-o-q annualized in Apr-Jun, and 1.9% in Jul-Sep, in the wake of the consumption tax hike."
"The major factor in our forecast for strong growth is recovery in exports. We expect real exports in Oct-Dec 2014 to grow 3.3% q-o-q, for a second straight quarterly increase, owing mostly to healthy exports to the US, which continues to exhibit strong economic growth, and the impact of persistent yen weakness since 2013."
"Looking ahead, we look for exports to remain strong on the back of these factors, and thus think an export-driven economic recovery in Japan could continue to pick up steam."
"Additionally, we look for real capex in Oct-Dec 2014 to rise 0.9% q-o-q, for the first quarterly increase in three quarters. We think sustained yen weakness has prompted Japanese companies to bring back to Japan the production of items destined for sale in the domestic market, rather than importing them from overseas plants, and we expect the resultant rise in domestic output to lead to a recovery in capex. Oct-Dec shipments of industrial capital goods (excluding transportation equipment), rose 3.7% q-o-q, versus an increase of just 0.1% q-o-q in Jul-Sep, principally on an increase in machinery investment and other capex, in our view."
Key Quotes
"We think the OctDec 2014 real GDP figures will reveal growth of 4.8% q-o-q annualized (+1.2% q-o-q). We think strong growth in Oct-Dec would suggest the Japanese economy is steadily heading toward a recovery after declines of 6.7% q-o-q annualized in Apr-Jun, and 1.9% in Jul-Sep, in the wake of the consumption tax hike."
"The major factor in our forecast for strong growth is recovery in exports. We expect real exports in Oct-Dec 2014 to grow 3.3% q-o-q, for a second straight quarterly increase, owing mostly to healthy exports to the US, which continues to exhibit strong economic growth, and the impact of persistent yen weakness since 2013."
"Looking ahead, we look for exports to remain strong on the back of these factors, and thus think an export-driven economic recovery in Japan could continue to pick up steam."
"Additionally, we look for real capex in Oct-Dec 2014 to rise 0.9% q-o-q, for the first quarterly increase in three quarters. We think sustained yen weakness has prompted Japanese companies to bring back to Japan the production of items destined for sale in the domestic market, rather than importing them from overseas plants, and we expect the resultant rise in domestic output to lead to a recovery in capex. Oct-Dec shipments of industrial capital goods (excluding transportation equipment), rose 3.7% q-o-q, versus an increase of just 0.1% q-o-q in Jul-Sep, principally on an increase in machinery investment and other capex, in our view."