Japan: GDP heading north – Danske Bank

Danske Bank analysts note that the Japanese GDP figures covering Q2 showed that the economy grew at an annualised rate of 1.8% compared to Bloomberg consensus of just 0.5%.

Key Quotes

“Q1 growth figures were also revised up to 2.8% from 2.2%. Net exports fell for a seventh straight month, as private consumption and investments have kept the economy on course this year. However, the outlook for private spending is gloomy due to a sales tax hike taking effect from October, and given that no solution seems in sight regarding the trade war, GDP forecasts for 2019 are at just 0.7%.”

“The Bank of Japan has addressed the excessive curve flattening (2y10y close to zero) by moving its asset purchases into shorter maturities and by doing so hopes to halt the appreciation of the yen.”