Japan: Real GDP turned to negative growth - Nomura

Takashi Miwa, Research Analyst at Nomura, points out that the Japan’s first preliminary 2018 Q3 GDP estimates show real GDP down 1.2% q-q annualized, for the first instance of negative growth since Jan-Mar (Q1).

Key Quotes

“Negative growth in itself is in line with market expectations, although we note that the scale of decline is larger than expected (the median Bloomberg consensus forecast is for negative growth of 1.0%).”

“A breakdown by demand category shows declines of 0.1% q-q for real consumer spending and 1.8% for real exports, with such factors working to push down overall real GDP growth.”

“We think this turn to negative GDP growth is a temporary downturn caused by the natural disasters. In fact, monthly indicators released since October point to a recovery in real exports and real consumer spending, which had also turned downward q-q in Jul-Sep.”