Japan’s Q1 GDP revised up more than expected

Japan's Q1 GDP (second preliminary release) was revised up sharply to 1.0% qoq, or 3.9% qoq annualised (was 0.6% qoq or 2.4% qoq annualised in the first preliminary). 

The upward revision was mainly due to much stronger capex, which was revised up from 0.4% qoq to2.7% qoq as a result of stronger-than-expected capital investment data released after the first preliminary figures, notes Societe Generale. The result confirms that corporate activity is accelerating, stimulated by the policies of Abenomics. In this context, Abenomics is successfully progressing towards a complete exit from deflation. 

Societe Generale has revised up 2015 GDP forecast to 1.3% from 1.2%, whereas, consensus expectation of 0.9% for 2015 GDP will probably be revised up.

On the other hand, private inventory has made a significant contribution to Q1 real GDP growth, and it was further revised up to +0.6pp from +0.5pp. When inventory investment makes a positive contribution to real GDP growth qoq, then either the pace of the increase in inventory has accelerated, or the pace of the decrease in inventory has slowed down.