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Economy in Brief

Japan's Q2 GDP Surprises On The Up Side
by Louise Curley  August 15, 2011

Although Japanese Gross Domestic Product declined at a seasonally adjusted annual rate of 1.3% in the second quarter, the decline was less than expected. Government expenditures on consumption and investment were positive factors and smaller declines in private consumption and imports also helped. The principal factor that caused the decline in total GDP was the decline in exports of good and services that fell at a seasonally adjusted annual rate of 18%. The rises in the yen versus the dollar and the euro are seriously impairing Japan's competitiveness. The quarter to quarter change in shipments in the manufacturing and mining industries for domestic use and for exports are shown in the first chart.

The GDP data released today by the Cabinet Office are the first preliminary estimates for the quarter. Some data are preliminary and others, such as the change in inventories, just not available. As a result the section of the accounts that shows the contribution to the quarterly percent change is incomplete. The quarter to quarter per cent change in real GDP in the second quarter was.0.3 percentage points. However, the changes in the components of GDP that are available add up to -0.6 points. These changes are shown in the second chart. This suggests that the Cabinet Office has estimated that the missing factor, the change in inventories, had made a positive contribution of 0.3 points. This is not surprising given that inventories have been declining for more than a year, as can be seen in the table below.

The Cabinet Office is now projecting that GDP in the fiscal year, beginning April 1, 2011, will show an increase of 0.5%, down from its January projection of 1.5%.

JAPAN Q2-11 Q1-11 Q4-10 Q3-10 Q2-10 Q1-10
Gross Domestic Product -1.3 -3.6 -2.5 3.9 -0.3 9.4
Private Consumption -0.3 -2.5 -3.4 3.9 -1.6 4.0
Government Consumption 2.0 3.6 1.5 1.8 3.0 1.2
Gross Fixed Capital Formation 1.9 -4.4 -2.9 2.2 1.8 4.4
Government 12.5 -4.0 -21.4 -8.4 -19.6 -1.4
Change in Inventories (Bil Chn 2000 Yen) N/A -2293 -502 -743 -2967 -516
Exports of Goods & Services -18.1 0.0 -3.9 2.9 29.0 26.9
Imports of Goods & Services 0.2 6.2 -2.5 10.4 21.1 11.1
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