Japan: Economy did not perform well in Q4 – Rabobank

Japan’s economy did not perform as well as expected in Q4 as growth fell sharply to 0.1% q/q (0.5% annualised), down from 0.6% q/q in the third quarters.

Key Quotes

“Although this was the lowest growth figure since 2015Q4, the economy has now expanded eight quarters in a row, marking the best growth streak since the late-1980s. Private consumption, growing by 0.5% q/q, returned to contribute to the growth figure, while net exports contributed slightly negative in the fourth quarter. Relatively strong global demand helped boost exports over the recent quarters, but our Japan analyst Björn Giesbergen does not believe that this performance can be sustained. It is therefore crucial that domestic demand strengthens in the periods ahead to offset a lower contribution of net exports. We currently estimate 1.2% GDP growth for 2018.”

“The extended quarterly growth run could add to speculation that the BoJ may lower its stimulus programme going forward, but we believe this is highly unlikely in the near-term given the still weak inflationary dynamics. Although core inflation (ex. fresh food) has been steadily rising throughout 2017 and posted 0.9% y/y in December 2017, this is still way off the BoJ’s 2% inflation target.”

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