08
Jun
GDP growth in Japan declines in Q1 for the first time since 2015
Risks of a technical recession in Q2. Depreciation of the yen still insufficient. Lacklustre leading indicators. Positive output gap. Nikkei rise depends on the yen factor.
Key Points
- Previously mentioned risks of an economic slowdown materialised in Q1 (-0.2%)
- Growth declines by -0.6% yoy
- Long sequence of quarterly increases in GDP comes to an end in Japan
- The economy should be able to avoid a technical recession in Q2
- Persistently weak household spending
- Historically low unemployment rate (2.5%)
- Leading indicators remain lacklustre
- The yen weakens further against the dollar
- Positive output gap (+1.5%) will boost inflation growth
- Record earnings in 2018 for Nikkei stocks (+35%)
- Any future increase in the Nikkei will depend on the yen
