Japanese GDP for 2Q17: stronger than was envisaged - ING

Japanese 2Q 2017 GDP arrived at  1.0% QoQ (that's 4.0% annualised!) and analysts at ING explained that not only was growth strong, but it was the right sort of growth.

Key Quotes:

"Japanese GDP for 2Q17 has come in far stronger than was envisaged, achieving 1.0%QoQ (sa), or 4.0% QoQ in annualized terms. That makes Japan the fastest growing economy in the G-7 this quarter by our reckoning and may re-start the chatter about the BoJ’s eventual QQE exit strategy. 

As well as very respectable private consumption growth of 0.9%QoQ, there was also encouraging 2.4%QoQ growth of non-residential investment. Public investment added about 0.2pp to the QoQ growth total, whilst inventories had no effect on the overall figures and net exports were a slight drag of 0.3pp. In other words, this was not one of those flukey one-offs that was caused by a surge in inventories that will be worked down in coming quarters, or one of those random spikes caused by exports and imports growing out of synch.

Although it is usually exactly the wrong thing to respond to volatile Japanese GDP data by revising full year forecasts, arithmetically, it is going to be hard for us to see only the 1.2% for 2017 we currently have pencilled in, and an upgrade now seems extremely likely."

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