Econintersect: Japan's GDP growth in the second quarter has been revised downward to 0.7% from an estimate last month of 1.4%. Both numbers are annualized rates of growth. This was much more severe a reduction than the 1.0% revision that economists had expected. The primary cause of the reduction was a decline in exports from earlier estimates. There are concerns in Japan that exports could be hit further if the yen appreciates in rsponse to further monetary easing actions by the U.S. Fed.
According to an article by Reuters, reduced private sector investment and slower than expected public spending for rebuilding from recent natural disasters have added to the slowdown resulting from weaker exports. From Reuters the primary headlines are (GDP numbers are quarter-to quarter):
- Q2 GDP growth revised to +0.2 pct vs forecast +0.3 pct
- Capital expenditure revised down as domestic demand weak
- Political gridlock leaves policymaking in limbo
The Bank of Japan and the government will be watched in the coming weeks for possible stimulus actions, although many observers think that political gridlock will delay government action. An area of possible stimulus would be increasing rebuilding expenditures.
- Japan Stocks Fluctuate Amid Economic Stimulus Speculation (Adam Haigh, Bloomberg, 09 Septemebr 2012)
- UPDATE 1 - Japan Q2 GDP revision down, builds case for stimulus (Tetsushi Kajimoto and Leika Kihara, Reuters, 10 September 2012)