Japanese 2Q GDP Better than Forecast

August 14, 2011

Japanese real GDP contracted 1.3% at an annualized rate (SAAR) between 1Q and 2Q, half as much as expected and less than the drops of 2.5% in 4Q10 and 3.6% in 1Q11.  Real GDP was 1.0% lower than a year earlier, the same on-year drop as in 1Q11 and below forecasts of minus 2.5%. 

Nominal GDP was 3.2% lower than in 2Q10 and posted a loss of 10.3% or 2.7% per annum in the four years between the second quarter of 2007 just before the start of the world financial crisis and the second quarter of 2011.  The GDP price deflator was 2.2% lower than a year earlier and has dropped by 1.4% per annum over the last four years.

In the second quarter, real personal consumption almost stopped falling, edging down 0.3% SAAR.  Government spending rose 3.6% SAAR, and non-residential investment rose 0.9%.  Inventories enhanced economic growth by 1.1 percentage points, reversing the drag they exerted in the first quarter.  These strengths were offset in 2Q by an 18.1% plunge in exports.  Net exports exerted a 3.0 percentage point drag on GDP growth.  Between the second quarters of 2010 and 2011, personal consumption slid 0.6%, public-sector spending dropped 5.4% and exports slumped 5.3%.  Non-residential investment edged 0.1% higher, and residential investment advanced 3.2%.

The first potential data minefields of this week has been skirted satisfactorily, but several more lie ahead.  The Nikkei-225 is 0.9% higher at 04:08 GMT.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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