Oct-Dec 2022 1st Preliminary GDP Estimate

◆The real GDP growth rate for Oct-Dec 2022 (1st preliminary est) registered modest growth at +0.6% q/q annualized (+0.2% q/q). Results fell below market expectations due largely to private sector inventories, whose negative influence on the GDP growth rate was more significant than expected. However, when looking at actual circumstances, economic recovery was stronger than suggested by the GDP growth rate. Personal consumption grew despite the spread of COVID-19 infections and rising prices. Export growth accelerated, receiving a boost from the export of services due to the sharp rise in consumption by foreign tourists visiting Japan (inbound consumption).

◆The outlook for the real GDP growth rate in the Jan-Mar period of 2023 sees growth of +3.1% q/q annualized. The COVID-19 infection situation is seen improving, and supply constraints in the motor vehicle industry are expected to ease further. Meanwhile, personal consumption will likely continue to recover with the effects of the government’s measures to curb high energy prices. Capital expenditure is expected to achieve growth centering on the non-manufacturing industry, and while the export of goods is growing at a sluggish pace, service exports are expected to register further growth with the help of inbound consumption.