Oct-Dec 2017 2nd Preliminary GDP Estimate

◆The real GDP growth rate for Oct-Dec 2017 (2nd preliminary est) was revised upwards to +1.6% q/q annualized (+0.4% q/q) in comparison to the 1st preliminary report (+0.5% q/q annualized and +0.1% q/q), while at the same time exceeding market consensus (+0.8% q/q annualized and +0.2% q/q). Demand components receiving revisions included public investment receiving a reduction in the extent of its decline due to improvement in latest figures in fundamental statistics, while private sector capital investment was revised upwards due to positive results on corporate statistics (demand side statistics). Meanwhile, inventory investment was also revised upwards, getting a lift from material & supplies inventory, which is provisional on the 1st preliminary GDP estimate.

◆We expect Japan’s economy to continue in a moderate expansion phase. Domestic demand is expected to continue its expansion centering on personal consumption, while overseas demand is expected to maintain steady growth backed by the expansion in the world economy, providing support for Japan’s economic growth. However, caution should be observed as overseas demand still has a strong sense of uncertainty, and domestic demand may be affected by rising prices and stagnant growth in real income. Moreover, some hesitation as regards capital investment may occur due to the strong yen, and housing investment could suffer a reactionary decline in response to recent growth spurred on by strategies in dealing with inheritance tax.