Jan-Mar 2024 1st Preliminary GDP Estimate

◆The real GDP growth rate for Jan-Mar 2024 (1st preliminary est) was down by -2.0% q/q annualized (-0.5% q/q). In addition to the major decline in production for some motor vehicle manufacturers associated with the authentication fraud issue, the GDP growth rate also received downward pressure from special factors, specifically a reactionary decline in the export of some services. This is the first time that private consumption has declined for four consecutive quarters since the global financial crisis of 2008 (Apr-Jun period of 2008 to Jan-Mar period of 2009). However, the effect of the decline in motor vehicle production during the Jan-Mar period of 2024 was especially significant, and if we exclude this factor, consumption actually shows signs of recovery.

◆The outlook for the real GDP growth rate in the Apr-Jun period of 2024 sees growth of around +3% q/q annualized (around +0.7% q/q). In addition to recovery production (production growth associated with the elimination of order backlog) for motor vehicles with the normalization of production activities, improvements in the household income environment due to major increases in wages won in spring labor negotiations and the Flat-amount Cut of Personal Income Tax will also contribute to GDP growth. On the other hand, downside risk to exports due to the deterioration of overseas economies will continue to require attention.