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Japan: Q4 GDP disappoints

Summary:
Japanese economy expands below expectations, while external uncertainties weigh on outlook.Japanese GDP rebounded by 0.3% quarter-on-quarter (q-o-q) in Q4 (1.4% annualised) after contracting by 0.7% q-o-q in Q3 (-2.6% annualised) due to a series of natural disasters over the summer. In year-over-year (y-o-y) terms, output remained virtually unchanged.Domestic demand was the main driving force for the rebound in Q4, while external demand continued to be a drag.A fairly strong domestic capex cycle is underway in Japan, likely due to the tight capacity constraints. However, if the deterioration in external demand gets much worse, this could derail this positive trend.We have decided to downgrade our Japanese GDP growth forecast for 2019 to 0.8% from 1.0% previously due to softer momentum and

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Japanese economy expands below expectations, while external uncertainties weigh on outlook.

Japanese GDP rebounded by 0.3% quarter-on-quarter (q-o-q) in Q4 (1.4% annualised) after contracting by 0.7% q-o-q in Q3 (-2.6% annualised) due to a series of natural disasters over the summer. In year-over-year (y-o-y) terms, output remained virtually unchanged.

Domestic demand was the main driving force for the rebound in Q4, while external demand continued to be a drag.

A fairly strong domestic capex cycle is underway in Japan, likely due to the tight capacity constraints. However, if the deterioration in external demand gets much worse, this could derail this positive trend.

We have decided to downgrade our Japanese GDP growth forecast for 2019 to 0.8% from 1.0% previously due to softer momentum and the high level of uncertainty on the external front.

Japan: Q4 GDP disappoints

About Dong Chen
Dong Chen
Dong Chen is senior Asia economist, Pictet Wealth Management. - Twelve years of working experience in macroeconomic research - Extensive knowledge about asset allocation and multi-asset class portfolios - Rich client-facing experiences with high-net-worth clients across Asia - Rigorous training in economics and comprehensive knowledge about Asian economies and business - Strong analytical skills and solid background in statistical/econometric analysis - Strong communication / presentation skills - Native Mandarin Chinese speaker and fluent in English Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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