Consensus outlook for Mace News
Monday, November 16
0850 JST (2350 GMT/1850 EST, Sunday, November 15) Cabinet Office releases preliminary GDP for July-September 2026.
Mace News median: +0.1% q/q (range -0.1% to +0.4%) vs. Q2 revised +0.4%; +0.3% annualized (range -0.3% to +1.5%) vs. Q2 revised +1.4%; +1.2% y/y (range +1.1% to +1.5%) vs. Q2 revised +0.9%
By Chikafumi Hodo
TOKYO (MaceNews) – Japan’s economy is expected to grow for a fourth straight quarter in the July-September period, but at only a modest pace close to zero. Continued demand related to artificial intelligence development is expected to support capital investment and help underpin overall economic growth.
Still, private consumption, which accounts for more than half of Japan’s gross domestic product (GDP), is expected to decline for the first time in 10 quarters as rising inflation, driven in part by higher food prices and other goods, has heightened consumer cost-consciousness and curbed spending.
A series of rainstorms, lower-than-usual temperatures in some regions and natural disasters, including strong earthquakes that hit Kumamoto on the southern main island of Kyushu and heavy rain in Chiba Prefecture near Tokyo, may also have affected production and consumption during the third quarter, weighing on GDP.
Real estate investment also appears to have declined during the quarter, while public investment is expected to continue falling as the effects of the supplementary budget for fiscal 2025 fade.
The economy is expected to maintain slight growth, supported by continued increases in capital investment amid sustained demand related to AI projects, including the construction of data centers and factories producing equipment and components used in the AI sector. Domestic demand is also expected to provide some support to the economy.
Against this backdrop, Japan’s preliminary real GDP is forecast to rise a modest 0.1% on the quarter in the July-September period, or an annualized 0.3%. This would mark a fourth straight quarter of growth, although the pace would slow from a 0.4% quarterly rise, or an annualized 1.4% increase, in the second quarter.
Private consumption, which accounts for about 55% of total domestic output, is forecast to fall 0.2% on the quarter, marking its first decline in 10 quarters after remaining flat in the April-June quarter.
Besides cost-consciousness amid inflation and the impact of natural disasters on consumption, private spending on durable goods was also affected by a pullback from demand brought forward in the previous quarter. In the April-June quarter, automobile purchases increased following tax cuts, while demand for air conditioners also surged as consumers brought forward replacement purchases ahead of stricter government energy-efficiency standards scheduled to take effect in April 2027.
Business investment is forecast to rebound 1.5%, marking its first rise in three quarters after falling 0.9% in the second quarter. The recovery is expected to reflect strong global demand for memory chips and domestic needs to upgrade business operations amid widespread labor shortages.
Public works spending is expected to post its second straight decline, falling 2.0% following a 0.5% drop in the previous quarter.
Details:
Key components are quarter-on-quarter percentage changes except for domestic demand, private inventories and net exports, whose contributions are in percentage points. Figures in the previous quarter are shown in parentheses:
GDP q/q: +0.1% (+0.4%); 4th straight rise
GDP annualized: +0.3% (+1.4%); 4th straight rise
GDP y/y: +1.2% (+0.9%); 9th straight rise
Domestic demand: +0.4 point (-0.1 point); 1st rise in 2 qtrs
Private consumption: -0.2% (+0.0%); 1st drop in 10 qtrs
Business investment: +1.5% (-0.9%); 1st rise in 3 qtrs
Public investment: -2.0% (-0.5%); 2nd straight drop
Private inventories: +0.1 point (+0.3 point); 2nd straight rise
Net exports (external demand): -0.4 point (+0.5 point), 1st drop in 4 qtrs