Japan: economy: Q4 GDP revised down as January's current account hits a record high March 2014.
Published 17 April 2014
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Japan’s Cabinet Office revised Q4 2013 GDP down on 10 March from a 1.0% annualised rate (0.3% quarter-over-quarter, q-o-q) to 0.7% (0.2% q-o-q). Private capital investment which was weaker than initially estimated (0.8% q-o-q vs. 1.3% q-o-q) was mainly responsible for the downgrade. Other GDP components such as private consumption, private residential investment and public demand were also slightly lower. As a result, 2013 real GDP growth was slightly downgraded to 1.5% from the previous estimate of 1.6%.
Q4 growth was weaker than the market expected. Following a survey on 3 March, many commentators had thought private inventories would increase offsetting weaker private capital investment but this proved not to be the case.
Also on 10 March, the Ministry of Finance released preliminary estimates of January Current Account (CA) data. The CA balance hit a record monthly deficit of 1.59 trillion yen (£9.3bn), surpassing the previous month’s record deficit of 0.64 trillion yen. The trade deficit stands at 2.35 trillion Yen (£13.8bn) - 1.04 trillion Yen (£6.1bn) higher than a year ago, driven by higher Yen prices of imported fuel and other imported goods such as electronic devices.
The Nikkei 225 index fell by 1.01% to close at 15,120. In addition to weaker GDP figures, market sentiment was affected by weaker than anticipated Chinese trade data.
0.1 Comment
The Bank of Japan began its two day monetary policy meeting on 10 March. It will release its monetary policy decision the next day. Given the weaker than expected Q4 2013 GDP figure, markets will pay close attention to what Governor Kuroda has to say at the press conference afterwards. The market expects the Bank to maintain its current monetary policy unchanged.
0.2 Disclaimer
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