Japanese GDP seen contracting 0.8% in 2020 – UOB

Senior Economist at UOB Group Alvin Liew assessed the recent publication of the Japanese GDP figures.

Key Quotes

“Japan’s 2Q 2019 GDP growth was revised lower to 0.3% q/q (1.3% annualized rate) from the previous print of 0.4% q/q (1.8% annualized rate) with the downgrade from capital expenditure (capex) and housing investment accounting for the growth revision”.

“Despite the still positive 1H GDP growth print, we maintain a cautious stance on Japan’s 2019 growth outlook. We still expect GDP growth to ease further to 0.5% in 2019 (from 0.8% in 2018) in view of external trade headwinds and more importantly, the likely collapse of private spending in 4Q 2019 post-sales tax hike. And notwithstanding the Tokyo Olympics next year, we believe that Japan’s GDP will contract by 0.8% in 2020 as we hold the view that the sales tax hike will cause the likely collapse of private spending which will consequently drive Japan into a recession next year”.