Japan: GDP figures surprised to the downside in Q3 – UOB

UOB Group’s Senior Economist Alvin Liew comments on the latest GDP figures in Japan.

Key Takeaways

“Japan’s 3Q 2022 GDP unexpectedly contracted by -0.3% q/q, -1.2% q/q SAAR (versus Bloomberg est: 0.3% q/q, 1.2% q/q SAAR, and UOB’s est 2.1% q/q SAAR) while the growth in 2Q was revised higher to 1.1% q/q, 4.6% q/q SAAR.”

“We were surprised by the q/q contraction in 3Q as we underestimated the impact of stronger inflation, the wave of COVID-19 infections in summer and a significant weakening of the yen that amplified the country’s already ballooning import bill. Both private consumption and business spending expanded in 3Q but at a slower pace from 2Q, while the main drags were net external demand and to a lesser extent, private inventories and residential investments.”

“Japan GDP Outlook – We expect GDP to rebound on a sequential basis in 4Q (by 0.7% q/q, 2.8% q/q SAAR) as the economy could find support from a surge in inbound tourism and from the latest economic stimulus package from the Kishida administration. With a 0.7% q/q rebound projected for 4Q, we keep our full-year 2022 GDP growth forecast unchanged at 1.5% (easing from 1.6% in 2021), and remain soft at 1.0% for 2023, due to the waning external demand and uncertainties which include 1) the on-going Russia-Ukraine conflict, 2) aggressive monetary policy tightening stance in the advanced economies, 3) geopolitical risks, and 4) COVID-19 risk of potential new variants.”