Japan’s Q1 GDP growth seen revised up on strong capex: Reuters poll

12:18 am Friday, June 02nd, 2023

By Kantaro Komiya

TOKYO (Reuters) – Japan’s economy likely grew more than initially estimated in the first three months of this year, thanks to solid investments by manufacturers, a Reuters poll showed.

Revised real gross domestic product (GDP) data is expected to show the world’s third-largest economy expanded at an annualised rate of 1.9% in the first quarter, higher than a preliminary reading of 1.6%, according to the poll of 18 economists.

A forecast 1.3% increase in capital expenditure, larger than the provisional estimate for a 0.9% rise, would be the main driver of upgrade, analysts said. Ministry of Finance data on Thursday showed Japanese firms ramped up spending on plant and equipment in January-March at the fastest rate since 2015.

“Manufacturers’ investments are growing vigorously on top of non-manufacturers’ spending, suggesting that the global manufacturing downturn has not brought big impacts to Japan,” SMBC Nikko Securities analysts wrote in a note.

“While we can’t characterise January-March as the exit period from stagnation, the data raises hope for the fiscal year 2023” which started in April, they added.

Japan’s economy emerged from recession in the first quarter as a post-COVID consumption rebound offset global headwinds, shoring up hopes for a sustained recovery.

Economists also projected Japan’s current account balance stayed in black in April thanks to a smaller services deficit as tourists flocked back to the country. The median estimate for April current account stands at a surplus of 1.6638 trillion yen ($12 billion).

Household spending in April was likely down 2.3% from a year earlier but up 0.6% from a month before, the poll also showed.

The government will release the revised first-quarter GDP figures and the current account balance data at 8:50 a.m. on June 8 (2350 GMT, June 7). Household spending data is due at 8:30 a.m. on June 6 (2330 GMT, June 5).

($1 = 138.74 yen)

(Reporting by Kantaro Komiya; Editing by Kim Coghill)