By Max Sato
(MaceNews) – Japan’s gross domestic product for the July-September quarter is forecast by economists to show a 4.4% rise on quarter, or an annualized 19.0%, led by a rebound in net exports and consumer spending, recovering about half of the 7.9% plunge (28.1% annualized) in April-June caused by the pandemic.
The median forecast for Q3 GDP is based on projections by nine economists which ranged from +3.8% to +5.5% on quarter, or an annualized +16.1% to +23.7%.
The Cabinet Office will release preliminary GDP data for the third quarter at 0850 JST on Monday, Nov. 16 (1850 EST on Sunday).
The expected expansion in the third quarter would be the first q/q rise in four quarters as demand for Japanese automobiles from the U.S. and chip-making equipment from China saw a gradual pickup from the depth of a global slump triggered by waves of coronavirus infections.
Consumers were also adapting to COVID-19 lifestyles, spending more on food to cook at home and ordering goods online while restricting dining out and traveling.
Factory output rebounded in Q3 but not enough to revive business investment for upgrading equipment and expanding automation, a key segment of the economy that is forecast to have fallen for the second consecutive quarter.
Export volumes rose a seasonally adjusted 14.3% on quarter in July-September, recovering some of the 21.4% plunge in April-June, according to the Cabinet Office.
The median forecast for net exports of goods and services — exports minus imports and the key Q3 growth driver — is for a positive 2.7 percentage point contribution to total domestic output (ranging from +2.3 to +2.9 points), the first rise in three quarters after -3.0 percentage points in Q2.
The Bank of Japan’s seasonally adjusted real export index rose 13.3% on quarter in Q3, marking the first gain in four quarters after -18.4% in Q2.
Among other growth leaders, the median forecast for private consumption, which accounts for about 55% of GDP, is for a 4.6% jump on quarter in Q3 (ranging from +3.1% to +5.8%) following a 7.9% fall in Q2.
Household spending rose a seasonally adjusted 3.6% in Q3, indicating a positive contribution to Japan’s economic growth in the three-month period.
On the downside, the median forecast for business investment is a 3.0% drop on quarter in Q3 (ranging from -1.8% to -5.5%) after shrinking 4.7% in Q2.
Going forward, economists expect Japan’s economy to continue growing in the final quarter of 2020, backed by a pickup in consumer sentiment, but they also warn that a spike in coronavirus infections in many parts of the world is likely to slow down economic activity again.
—
Content may appear first or exclusively on the Mace News premium service. For real-time email delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.