Japan’s economy likely expanded modestly in Q1 2016

Japan’s economy is likely to have grown modestly in the first quarter of 2016. The real GDP is expected to have grown 0.1% q/q, said Societe Generale in a research report. This is likely to be a weak recovery after the economy shrank 0.3% q/q in the last quarter of 2015. Business confidence has worsened since the start of 2016 because of uncertainty in global economy and yen’s appreciation. In the first quarter, real export growth continued to be weak at 0.3% q/q.

Japan’s real business spending is expected to have fallen sharply in Q1 following a stronger growth of 1.5% q/q in Q4 2015. Real consumption likely grew marginally by 0.4% q/q, according to Societe Generale. Consumer confidence has continued to decline since the consumption tax was raised in April 2014. The country is set to hike the tax again in April 2017. Meanwhile, nominal GDP growth is likely to have stayed strong at 0.7% q/q in the first quarter, added Societe Generale.

“We expect real GDP growth in H2 16 to rebound to about 2.0% on an annualised basis”, noted Societe Generale.