Solid recovery likely in Japan’s Q3 GDP

The GDP growth rate of Japan is expected at 1.0% year on year in Q3 against the earlier estimate of -0.8%. With the upward revision in the growth rate the economy is unlikely to mire in recession in Q3. 

The better GDP readings back their expectation of no change in the BoJ's QQE program in the coming two years, argues Nordea Bank. After the updated GDP numbers, the JPY appreciated modestly against the USD.

Private gross fixed capital formation in the economy posted a solid growth rate of 3.2% year on year. This was more than enough to balance the 6.1% fall in public fixed capital formation. In addition to this, household consumption posted a solid growth rate of 1.5% y/y and contribute 0.9% point to Q3 growth in Q3 GDP, notes Nordea Bank.