Oct-Dec 2023 2nd Preliminary GDP Estimate

◆The real GDP growth rate for Oct-Dec 2023 (2nd preliminary est) was revised upwards to +0.4% q/q annualized. The 1st preliminary report showed a second consecutive decline in growth, but the estimate for capex was revised upwards, bringing a return to positive growth for GDP. At the same time, many demand components, including private sector inventories and personal consumption, were revised downwards, causing the real GDP growth rate to fall below market expectations. Personal consumption declined for the third consecutive quarter, again confirming the stagnation of domestic demand.

◆The 2024 Jan-Mar period real GDP growth rate is expected to be modest at around +0.5% q/q annualized. Production activities will be held back by production halts at some motor vehicle factories, while in addition, the export of services will likely see the reactionary decline in usage fees for intellectual property become manifest. On the other hand, personal consumption and capex are expected to grow, and the effects of the Noto Peninsula Earthquake of 2024 on GDP are expected to be limited. Meanwhile, continued attention should be paid to factors such as the downside risk in exports due to deterioration in overseas economies.