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20 May 2015
Japan's GDP to fall in Q1 on weak domestic demand - Nomura
FXStreet (Bali) - Nomura Research Analyst Team expects Japan's GDP (due at 23.50 GMT today) to fall in Q1 because of weak domestic demand.
Key Quotes
"First set of preliminary estimates for Q1 2015 real GDP (Wednesday): We expect 2015 Q1 real GDP figures to reveal a decline of 0.3% q-o-q annualized (down 0.1% q-o-q)."
"Real GDP in Q4 2014 rose by 1.5% q-o-q annualized, marking the first move into positive growth territory for three quarters, but this was followed by a loss of momentum in the recovery, including a weakening of consumer spending."
"For 2015 Q1 we estimate flat (0.0%) q-o-q real consumer spending, marking a slowdown versus growth of 0.5% q-o-q in Q4 2014. In our view, this is because consumer sentiment has not yet recovered completely, resulting in a weak propensity to consume."
"Moreover, we think that people have cut back on their discretionary spending in response to recent rises in prices of everyday products frequently bought by consumers, such as food."
"In our view, this lacklustre domestic demand has also translated into weak capital investment, particularly in the nonmanufacturing sector. For Q1 2015 we estimate a decline in real capital investment of 0.2% q-o-q, to mark the fourth consecutive quarterly decline."
"Meanwhile, real private-sector inventories have been edging higher, which we think will boost Q1 real GDP growth by 0.2 percentage points (pp) q-o-q."
"We think data for Q1 will show continued firm growth in exports. Despite a negative contribution from factors such as port strikes on the US West Coast, the data should show a broadly solid recovery. Meanwhile, despite sluggish domestic demand, imports exhibited relatively strong growth, and as a result, we think that overseas demand contributed negatively to real GDP of 0.2pp q-o-q."
"In our view, lower crude prices may have prompted moves to stock up on cheaper fuel, and indeed we estimate that higher mineral fuel imports dented real GDP by around 0.2pp q-o-q. Moreover, based on weaker contract value data in public works and subcontractor statistics, we look for public investment to move from a rise of 0.8% q-o-q in Q4 2014 to a fall of 2.9% in Q1 2015."
"Meanwhile, we expect to see a substantial increase of 3.9% y-o-y in the GDP deflator for Q1 as a result of the consumption tax hike and lower crude oil prices (a sharp decline in import prices since January has provided a boost to the GDP deflator). As such, we estimate a 6.2% q-o-q annualized increase in Q1 nominal GDP, with a widening gap between real and nominal GDP growth."
Key Quotes
"First set of preliminary estimates for Q1 2015 real GDP (Wednesday): We expect 2015 Q1 real GDP figures to reveal a decline of 0.3% q-o-q annualized (down 0.1% q-o-q)."
"Real GDP in Q4 2014 rose by 1.5% q-o-q annualized, marking the first move into positive growth territory for three quarters, but this was followed by a loss of momentum in the recovery, including a weakening of consumer spending."
"For 2015 Q1 we estimate flat (0.0%) q-o-q real consumer spending, marking a slowdown versus growth of 0.5% q-o-q in Q4 2014. In our view, this is because consumer sentiment has not yet recovered completely, resulting in a weak propensity to consume."
"Moreover, we think that people have cut back on their discretionary spending in response to recent rises in prices of everyday products frequently bought by consumers, such as food."
"In our view, this lacklustre domestic demand has also translated into weak capital investment, particularly in the nonmanufacturing sector. For Q1 2015 we estimate a decline in real capital investment of 0.2% q-o-q, to mark the fourth consecutive quarterly decline."
"Meanwhile, real private-sector inventories have been edging higher, which we think will boost Q1 real GDP growth by 0.2 percentage points (pp) q-o-q."
"We think data for Q1 will show continued firm growth in exports. Despite a negative contribution from factors such as port strikes on the US West Coast, the data should show a broadly solid recovery. Meanwhile, despite sluggish domestic demand, imports exhibited relatively strong growth, and as a result, we think that overseas demand contributed negatively to real GDP of 0.2pp q-o-q."
"In our view, lower crude prices may have prompted moves to stock up on cheaper fuel, and indeed we estimate that higher mineral fuel imports dented real GDP by around 0.2pp q-o-q. Moreover, based on weaker contract value data in public works and subcontractor statistics, we look for public investment to move from a rise of 0.8% q-o-q in Q4 2014 to a fall of 2.9% in Q1 2015."
"Meanwhile, we expect to see a substantial increase of 3.9% y-o-y in the GDP deflator for Q1 as a result of the consumption tax hike and lower crude oil prices (a sharp decline in import prices since January has provided a boost to the GDP deflator). As such, we estimate a 6.2% q-o-q annualized increase in Q1 nominal GDP, with a widening gap between real and nominal GDP growth."