Second Preliminary Estimate of 2Q 2013 GDP

◆In the second preliminary estimate of Apr-Jun (2Q) 2013 GDP (Cabinet Office), real GDP was +0.9% q/q, annualized at +3.8%, posting an upgrade from the first preliminary estimate (up 0.6%; up 2.6%). This was almost on par with market expectations (up 1.0%; up 3.9%) and confirmed a steady recovery of the economy.

◆The economy grew supported by well-balanced growth of domestic and foreign demand. Domestic demand saw a positive contribution to q/q GDP growth (+0.7 percentage points; first preliminary estimate: +0.5 points), while foreign demand also made a positive contribution (+0.2 points for first and second estimates). In addition, domestic demand has recovered driven by personal consumption so far, but as witnessed by a turning around of capex in the second preliminary estimate (from negative growth in first preliminary estimate), improvement should be felt in the corporate sector. The second preliminary estimate of Apr-Jun 2013 GDP holds the key to weighing the possibility of the consumption tax hike being carried out, and the GDP figure indicates the tax hike is very likely to be implemented as scheduled.