Edition: India  
 
> >

Japan GDP Surges 4%, Most In Two Years, On Jump In Government Stimulus Spending

Zero Hedge Monday, 14 August 2017 ()
Japan GDP Surges 4%, Most In Two Years, On Jump In Government Stimulus SpendingJapan's economy grew by 1% sequentially, and 4% on an annualized basis in Q2, smashing expectations of a 2.5% print and well above the upward revised 1.5% in the first quarter; it was also the the highest quarterly growth since a 5% print in Q2 2015, Japan's Cabinet Office reported, and the 6th consecutive quarter of expansion for recently embattled Prime Minister Shinzo Abe, who has plunged in the polls following a series of corruption scandals.

The unexpectedly strong GDP print was driven by a 9.9% jump in private non-residential investment as well as an striking 21.9% annualized surge in public investment as some of the public works spending included in last year’s economic stimulus package starting to emerge; meanwhile exports declined.

On a sequential basis, GDP rose 1.0%, above the 0.6% expected, up from the 0.4% in Q1 and the highest print in just over two years.

Annualized private demand soared by 5.3%, or 1.3% higher compared to the first quarter, an impressive jump from the previous quarter’s rise of 0.2%. Private consumption rose 0.9% in Q2, more than double the 0.4% reported for the first quarter.  Aside from the clearly "one-time" surge in public investment, which in the second quarter exploded by an annualized 21.9% as some of the public works spending included in last year’s economic stimulus package have started to emerge, private non-residential investment climbed 2.4% from 0.9% in Q1, while government consumption grew 0.3%, bouncing from a 0.1% contraction in the prior quarter.

Finally, spoiling the otherwise pristine report was the unexpected drop in exports of goods and services which dropped 0.5% on a quarterly basis and -1.9% annualized, the lowest export number since Q2 of 2016. The plunge in net exports dragged Japan's headline growth figure down 0.3% points.

Ahead of the number, Goldman's Japan analyst Naohiko Baba said that "we estimate Apr-Jun real GDP growth of +2.4% qoq annualized, up from +1.0% in Jan-Mar. While we expect net exports to turn to a negative contributor, we think private-sector demand was strong for personal consumption and capex. We also expect double-digit growth for public capital formation*, with some of the public works spending included in last year’s economic stimulus package starting to emerge*. We think Apr-Jun GDP will show a clearer tilt toward domestic demand led growth. "

Separately, Barclays analysts said that "looking forward, *we expect real GDP to rise an annualized 1.3% in Q3, 0.9% in Q4, and 1.0% in Q1 2018 on a q/q basis,” *they wrote. “For Q3, we believe external demand will reverse to a positive contribution and anticipate a continued economic boost from last fiscal year’s second supplementary budget of 11 October 2016?.

Considering the absolute non-reaction in markets, where the USDJPY is up barely 20 pips in a delayed response to Japan's "best" economic report in over two years, either nobody puts any credibility in this number, or just as likely, fundamental economic data no longer matters to any investing decisions.

Finally, as some commentators put it best on Twitter, *"yen climbs on nuclear war. yen falls on strong GDP. good*"



yen climbs on nuclear war. yen falls on strong GDP. good

— Lee Saks (@Lee_Saks) August 14, 2017
0
shares
Share on
Facebook
Share on
Twitter
Post on 
Reddit
Share by
Email
 
Source: Bloomberg Global Business - < > Embed

News video: Japan's 2Q GDP Expands More Than Forecasted

Japan's 2Q GDP Expands More Than Forecasted 02:20

Aug.13 -- Nicholas Smith, Japan strategist at CLSA, discusses Japan's second-quarter GDP figures and what they mean for the economy. He speaks on "Bloomberg Daybreak: Asia."

You Might Like


Recent related news

Japan Q2 GDP blows past expectations on robust domestic demand

TOKYO (Reuters) - Japan's economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at...
Reuters India - BusinessAlso reported by •DNA

Other recent news in Markets

BANNON Fired From The White HouseWith BANNON OUT, Is War With North Korea More Likely: Here Are The Scenarios
Former BREITBART Employee Says Bannon Firing 'The Worst Nightmare' for GlobalistsCARL ICAHN Says He Is No Longer Trump's Special Advisor
MITT ROMNEY Blasts Trump: "What He Communicated Caused Racists To Rejoice"Pat Buchanan Asks "In This Second American CIVIL WAR - Whose Side Are You On?"
CMG EQUITY ALERT: The Law Offices of VINCENT Wong Reminds Investors of a Class Action Involving Chipotle Mexican Grill, Inc. and a Lead Plaintiff Deadline of September 18, 2017CLIMATE CHANGE Opens Up Shorter Arctic Passage For LNG

Twitter

Environmentally friendly: newsR is hosted on servers powered solely by renewable energy
© 2017 newsR / One News Page Ltd. All Rights Reserved.  |  About us  |  Disclaimer  |  Terms & Conditions  |  Privacy Policy  |  Content Accreditation
 RSS  |  News for my Website  |  Free news search widget  |  Help  |  Contact us  |  DMCA / Content Removal
How are we doing? Send us your feedback  |   LIKE us on Facebook   FOLLOW us on Twitter