JPY: Japan Q1 GDP -0.5% QoQ, meets expectations
The Japan Q1 GDP data came at -0.50% QoQ versus -0.50% printed in the last quarter. Annualised GDP data came at -1.8% QoQ versus -2.0% QoQ in the previous quarter. Japanese Yen loses Ground against Counter pairs after the Q1 GDP came at expected data.
USDJPY is moving in Ascending channel and market has reached higher low area of the channel
The Japanese Gross Domestic Product (GDP) for the first quarter (Q1) experienced a contraction of 0.5% quarter-on-quarter (QoQ), according to data released by the Cabinet Office on Monday. This result matched both the expected contraction of 0.5% and the contraction reported for the previous quarter.
Additionally, on an annualized basis, the GDP for Q1 shrank by 1.8%. This figure was slightly better than the anticipated contraction of 1.9% and an improvement over the previous reading, which showed a contraction of 2.0%.
JPY: Japan Q1 GDP Revised Up on Capex Improvement
The Japan Q1 GDP data showed a contraction of 0.50% quarter-on-quarter (QoQ), matching the -0.50% contraction reported in the previous quarter. On an annualized basis, GDP contracted by 1.8% QoQ, an improvement compared to the -2.0% contraction in the previous quarter. Following the release of this expected GDP data, the Japanese Yen lost ground against other currencies.
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Japan’s economy contracted less than initially reported in the January-March period due to upward revisions in capital spending and inventory data. This modest improvement supports the central bank’s plans to raise interest rates again this year. Analysts believe that the Japanese economy may have reached its lowest point in the first quarter, despite a persistently weak yen and disruptions at major automaker plants clouding the outlook for the current quarter.
“The revised GDP results made it easier for the Bank of Japan (BOJ) to feel encouraged about future rate hikes as it can assess capital investment is picking up even by a little bit,” said Kohei Okazaki, senior economist at Nomura Securities.
Japan’s GDP shrank by a revised annualized rate of 1.8% in the first quarter from the previous three months, according to data released by the Cabinet Office on Monday. This contraction was smaller than the economists’ median forecast of a 1.9% contraction and the preliminary estimate of a 2.0% decline.
The revised figure translates into a quarter-on-quarter contraction of 0.5% in price-adjusted terms, which is unchanged from the initial reading issued last month.
The revised GDP data comes amid speculation that the BOJ may discuss reducing its Japanese government bond (JGB) purchases at its policy review this week. This is part of its efforts to unwind monetary stimulus to curb yen weakening. Investors are looking for clues about the timing of further rate hikes by the central bank, which raised rates in March for the first time since 2007, marking a significant shift away from ultra-loose monetary policy.
“We can say capital spending picked up in the latter half of the fiscal year ending in March 2024… current capex conditions are a relief, but we must be cautious about the outlook,” Okazaki said. “We can also maintain the view that consumption is on track for recovery due to hefty pay raises agreed at annual labor talks and income tax cuts that kicked in from June.”
Private consumption, which accounts for more than half of the Japanese economy, fell by 0.7% in the first quarter, unchanged from the preliminary estimate as rising living costs squeezed household finances. This marked the fourth straight quarter of decline.
External demand, or exports minus imports, reduced overall GDP by 0.4 percentage points, while domestic demand subtracted 0.1 points, the data showed.
JPY: Japan Q1 GDP Shrinks Less Than Initially Expected
The Japanese first quarter (Q1) Gross Domestic Product (GDP) data revealed a contraction of 0.50% quarter-on-quarter (QoQ), mirroring the 0.50% decline registered in the preceding quarter. On an annualized basis, the GDP contraction was recorded at 1.8% QoQ, a modest amelioration from the preceding quarter’s -2.0% contraction. In the aftermath of the dissemination of these anticipated GDP figures, the Japanese Yen depreciated relative to its currency counterparts.
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Japan’s economy contracted slightly less than initially estimated in the first quarter, as a drop in capital spending was not as severe as expected, although weak private consumption continued to keep the economy in contraction.
Gross domestic product (GDP) shrank 1.8% year-on-year in the three months to March 31, according to a revised reading released on Monday. The initial reading showed a decline of 2%, while GDP had grown by 0.4% in the previous quarter.
Quarter-on-quarter, GDP fell 0.5% in the first quarter, consistent with the initial estimate, following a rise of 0.1% in the December quarter.
The slight improvement in GDP was due to revised data showing that capital expenditure shrank less than initially expected, falling 0.4% quarter-on-quarter compared to initial estimates of a 0.8% decline. This was attributed to strong earnings by Japanese companies in the first quarter, leading to increased spending.
Despite this improvement, Japan’s economy still contracted in the quarter, primarily driven by weak private consumption, which fell 0.7% quarter-on-quarter, in line with initial estimates. Private consumption, a key driver of the Japanese economy, faced increased pressure from persistent inflation and a depreciating yen over the past year. However, consumption is expected to potentially pick up in the coming months due to higher wages.
The weakness in Japan’s economy limits the extent to which the Bank of Japan (BOJ) can tighten monetary policy, following a historic rate hike earlier this year.
The BOJ is set to meet on Friday and is expected to continue tightening policy by scaling back its asset purchases. However, analysts do not anticipate further interest rate hikes in the near term.
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