Link Securities | Japan’s GDP contracted by 1% in Q1 2022 from the previous quarter on an annualised basis, a smaller decline than the 1.8% drop expected by analysts. In addition, in the previous quarter Japan recorded GDP growth of 3.8%, revised downwards from an initial estimate of 4.6% growth. The main surprise was a marginal 0.1% annualised fall in private consumption, which is explained as the main drag on the country’s economy, reflecting the impact of the Covid 19 Omicron variant.
Private demand was supported by moderate growth in capital investment, while investment in the residential real estate segment lagged slightly. The main factor was net external demand, as import growth outpaced export growth, which was broadly in line with the previous quarter. Moreover, this factor was combined with successive reductions in public investment.
So Japan’s GDP growth in fiscal year 2021 reached 2.1%, matching the latest forecast of the Bank of Japan (BoJ). The Q1 2022 GDP deflator fell by 0.4% y-o-y, down from 1.3% in Q4 2021, while the domestic demand component rose by 1.8%, its fastest pace of growth since Q4 2014. Looking ahead, the latest analyst consensus surveys point to a 5% GDP rebound in Q2 2022.
