Senior Economist at UOB Group Alvin Liew comments on the publication of Japanese Q2 GDP figures.

Key Takeaways

“Japan’s 2Q 2022 GDP missed market expectations, as it grew by 0.5% q/q, 2.2% q/q SAAR (versus Bloomberg est: 2.6% q/q SAAR, but in line with UOB est 2.2% q/q SAAR) while the -0.5% contraction in 1Q was revised to a surprising 0.1% expansion. It is also notable that the 2Q growth (and 1Q upward revision) finally lifted the real GDP of Japan to JPY542.1 trillion, above the pre-pandemic level of JPY 540.9tn in 4Q 2019.”

“Sequential expansion in 2Q was due to increases in private consumption, business spending, government consumption and a surprise rebound in public investment. The key drag on the economy was the 0.4ppt decline from private inventories while net external demand/net exports of goods and services did not contribute to sequential growth.”

“We expect the Japanese economy to continue its rebound although the extent could be curbed by stronger inflation impacting domestic demand. Japan remains slow to re-open borders to tourism with daily COVID-19 infections still high at 200,000. Meanwhile, weaker growth outlook in Japan’s key trading partners (especially Eurozone) will also imply weaker demand for Japan’s exports, adding further downside to growth.”

“Despite the slightly more positive growth outcome in 1H 2022, there will greater caution on the external outlook which has deteriorated materially compared to three months ago and the external risks include: 1) the on-going Russia-Ukraine conflict, 2) monetary policy tightening stance in the advanced economies, 3) geopolitical risks, and 4) COVID-19 risk of potential new variants.”

“We expect Japan to continue its growth trajectory but are mindful of the external risks. We are comfortable with our current full-year 2022 GDP growth forecast at 1.5%, a slowdown from 1.7% in 2021. We expect growth to remain at a lacklustre 1.4% for 2023, due to the uncertain external outlook. With Japan’s moderate economic recovery and the challenging external growth outlook while inflation driven by commodities, it means that the BOJ will not be tightening or signaling to do so anytime in 2022.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

AUD/USD bulls keep the reins above 0.6800 ahead of RBA’s Lowe, US NFP

AUD/USD bulls keep the reins above 0.6800 ahead of RBA’s Lowe, US NFP

AUD/USD portrays the typical pre-data/event anxiety as it seesaws near 0.6800 during the early Asian session on Friday, after refreshing the 11-week high the previous day. The Aussie pair rose during the last three consecutive days amid broad US Dollar weakness.

AUDUSD News

EUR/USD grinds near five-month high past 1.0500, ECB’s Lagarde, US NFP in focus

EUR/USD grinds near five-month high past 1.0500, ECB’s Lagarde, US NFP in focus

EUR/USD cheered the broad-based US Dollar weakness to march towards the highest levels since late June, before recently taking rounds to 1.0520-30 during the generally quiet early Asian session. Mixed data from Eurozone, United States, failed to tame the bulls.

EUR/USD News

Gold approaches $1,807 hurdle ahead of United States Nonfarm Payrolls

Gold approaches $1,807 hurdle ahead of United States Nonfarm Payrolls

Gold price (XAU/USD) refreshed a four-month high above $1,800 before taking rounds to $1,805-07 during early Friday morning in Asia. In doing so, the yellow metal portrays the market’s cautious mood ahead of the key catalysts.

Gold News

Coinbase Wallet disables NFT transfers as Apple forces 30% fees compliance

Coinbase Wallet disables NFT transfers as Apple forces 30% fees compliance

Coinbase Wallet took a dig at the biggest tech company in the world, Apple, after it was forced to deactivate some of its features. The wallet service of the world's second-biggest cryptocurrency exchange in the world could not follow certain policies by Apple.

Read more

Nonfarm Payrolls Preview: Dollar selling opportunity? Low expectations to trigger temporary bounce Premium

Nonfarm Payrolls Preview: Dollar selling opportunity? Low expectations to trigger temporary bounce

A flashback to 2019 just before 2022 ends? The last Nonfarm Payrolls release is set to show a pre-pandemic level of job gains, around 200,000. Or maybe lower. However, expect another positive surprise – triggering a temporary Dollar bounce. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures