Oct-Dec 2014 2nd Preliminary GDP Estimate

◆The real GDP growth rate for Oct-Dec 2014 (2^nd preliminary est) was revised downward from the 1^st preliminary estimate (+2.2% q/q annualized, +0.6% q/q) to +1.5% q/q annualized (+0.4% q/q). Results also fell below market consensus at +2.2% q/q annualized despite predictions that there would be almost no change in comparison to the 1^st preliminary report, while capex also shifted into a downward trend, thereby reflecting a somewhat negative tone.

◆In terms of source of demand, the downward revision in capex and inventories brought downward pressure on the overall GDP figure. Capital expenditure was down by -0.1% q/q, a complete turnaround in comparison to the figures reported in the 1^st preliminary estimate (+0.1%), making this the third consecutive quarter to experience a decline. Despite corporate statistics having produced expectations for an upward revision in capex, the figure was ultimately revised downwards, thereby becoming a factor in GDP results falling below market consensus. Inventory investment was also expected to bring a positive contribution on the 1^st preliminary estimate at +0.2%pt q/q, but finally was revised downwards to -0.2%pt, bringing a negative contribution to GDP. However, the downward revision of inventory investment is also a sign that inventory adjustment is progressing, hence these results by no means paint an overly pessimistic picture.