Japan's real GDP to show strong growth in FY2015

Japan recorded solid Q1 2015 GDP growth of +0.6% qoq (or +2.4% qoq at an annualised rate), with inventory making a significant contribution (+0.5ppt) to real GDP growth over the period. 

According to the analysis, inventory investment remained negative in Q1, which means that the pace of decline in inventory has slowed down as opposed to inventory having increased. Therefore, the reduction in inventory should not be a major concern for the real GDP outlook. 

On the contrary, the outlook for domestic demand expansion is likely to strengthen, and suppressed inventory investment should gradually ease. 

"We continue to expect FY2015 real GDP to show strong growth of around 2.3%, well above the market consensus of around 1.8%",says Societe Generale.