Japan's economic growth is expected to expand modestly in the third quarter, with real GDP forecast to rise 0.3% on an annualized quarterly basis, according to a Reuters survey released on the 6th. The estimate marks a significant slowdown from the 1.4% growth recorded in the April-to-June period, as cautious consumer spending and slowing external demand offset a gradual recovery in corporate capital expenditure. The forecast suggests Japan's economy could achieve growth for a fourth consecutive quarter, though the expansion pace has decelerated sharply from the previous quarter. Without annualization, Japan's GDP in the previous quarter is estimated to have grown only 0.1%.
Japan Q3 GDP Growth Forecast at 0.3%
Economists surveyed by Reuters estimate Japan's real GDP grew 0.3% on an annualized quarterly basis in the July-to-September period, down from 1.4% growth in the second quarter. The forecast indicates the economy could post growth for four consecutive quarters despite the slower pace. When calculated without annualization, Japan's GDP in the previous quarter is projected to have increased by just 0.1%.
Corporate Capital Expenditure Shows Recovery
Japanese corporate capital expenditure is forecast to grow 1.5% in the third quarter, a substantial increase from the 0.9% decline recorded in the second quarter. The recovery in business investment represents a positive factor supporting economic expansion, according to the survey results.
Private Consumption Contracts for First Time in Seven Quarters
Private consumption, which accounts for more than half of Japan's GDP, is expected to decrease 0.2% in the third quarter, marking the first contraction in seven quarters. Analysts note that while service consumption performed strongly in the July-to-September period, durable goods spending was hindered by policy factors and non-durable goods expenditure was restrained by rising inflation, resulting in limited GDP growth.
External Demand Turns Negative on Import Increase
Net external demand—exports minus imports—is projected to subtract 0.4 percentage points from GDP in the third quarter, reversing from a 0.5 percentage point contribution in the second quarter. Analysts attribute the shift to negative external demand to increased imports, reflecting changes in purchasing patterns for oil substitutes. Economic growth performance is one of the factors the Bank of Japan considers when evaluating further interest rate increases.
FAQ
What is Japan's GDP growth forecast for the third quarter?
Japan's real GDP is forecast to grow 0.3% on an annualized quarterly basis in the third quarter, according to a Reuters survey released on the 6th. This represents a slowdown from the 1.4% growth recorded in the April-to-June period.
Why is Japan's private consumption expected to contract in Q3?
Private consumption is forecast to decrease 0.2% in the third quarter, the first contraction in seven quarters. Analysts cite policy factors hindering durable goods spending and rising inflation restraining non-durable goods expenditure, despite strong service consumption performance during the period.
