6% growth for Japan – Nikko AM’s John Vail comments on suprising data

by | Aug 15, 2023

The 6% rate of annualised growth in Japan’s GDP figures which was revealed this morning, and which translated into a quarterly gain of 1.5%, has prompted some analysis from Chief Global Strategist John Vail, at Nikko Asset Management.

Japan’s surprising GDP surge to a record high was led by external trade, with exports in real terms rising strongly while imports sank. Excluding such, domestic demand, including in the private sector declined vs. the January-March quarter. Real personal consumption declined, which was much weaker than expected, and remains well below pre-pandemic levels as inflation hampered demand. Residential construction rose, but also remains well below pre-pandemic levels, while corporate capex was roughly flat and approached record levels.

Moreover, the previous four quarters of GDP were revised up, with the January-March quarter up by an unannualized 0.3%. Corporate capex and residential construction were revised up the most, but personal consumption was also revised up a modest amount, while government spending was revised down.

After all the revisions, GDP rose at a 2.0% rate vs. last year, the same rate as the previous quarter. On this basis, personal consumption rose only 0.2% after 2.7% in the previous quarter, while other major categories rose much more firmly. Real exports rose on this basis for the tenth consecutive month, while real imports finally declined. Domestic demand only grew at 0.8% after 2.4% in the previous quarter.

Despite the headline strength, domestic demand actually fell in the quarter and only grew 0.8% vs. last year. The export news was heartening and bodes well for Japan’s continued trade competitiveness, while the outlook for domestic demand should improve somewhat as inflation decelerates and thus supports more personal consumption.

Related articles

Value Partners Group Multi-Asset Perspective September 2023

Value Partners Group Multi-Asset Perspective September 2023

As we’re nearing the end of September, Kelly Chung, Investment Director and Head of Multi-Assets at Value Partners Group in Hong Kong has been reflecting on how different asset classes have performed in China over the previous month, and she’s asked me to share her...

Latest Articles

US open: Stocks steady as inflation continues to ebb

US open: Stocks steady as inflation continues to ebb

(Sharecast News) - Wall Street was on a firmer footing on the last trading day of the third quarter as a key inflation indicator printed slightly below the consensus forecasts. "The September rut in stock indices paused into quarter end as both Eurozone and the Fed's...

FTSE 100 movers: Severn Trent, JD Sports rally

FTSE 100 movers: Severn Trent, JD Sports rally

(Sharecast News) - London's FTSE 100 was up 0.5% at 7,642.68 in afternoon trade on Friday. Severn Trent was the standout performer on the index after saying it was seeking to raise £1bn for a transformation plan expected to create 7,000 jobs across the Midlands. JD...

Annual UK property sales fall in August – HMRC

Annual UK property sales fall in August – HMRC

(Sharecast News) - Annual house sales fell sharply in August, provisional government data showed on Friday. According to HM Revenue and Customs, the seasonally-adjusted estimate of UK residential transactions was 87,010 last month. That was a 1% uptick on July 2023...

BofA Merrill Lynch upgrades Marks & Spencer to ‘buy’

BofA Merrill Lynch upgrades Marks & Spencer to ‘buy’

(Sharecast News) - Bank of America Merrill Lynch upgraded Marks & Spencer on Friday to 'buy' from 'neutral' as it argued the stock is still too cheap and consensus earnings too low. The bank said that despite the stock's outperformance year-to-date, it believes that...

Retail sales climb as September heatwave fades – BDO

Retail sales climb as September heatwave fades – BDO

(Sharecast News) - High street sales pushed higher last week, industry research showed on Friday, as delayed autumn spending finally looked to have got underway. According to the latest BDO High Street Sales Tracker, total like-for-like sales rose by 5.51% in the week...

Join our mailing list

Subscribe to our mailing list to receive regular updates!

No Fields Found.
x