- According to the first print, Japan’s GDP growth rebounded to 1.4% qoq annualized after the drop by 2.6% qoq ann. in Q3, caused by natural disasters.
- Private consumption and business investment were the main positive drivers, while net exports and the inventory component dragged on growth.
- Looking ahead, we expect exports to remain lackluster given softening global growth. By contrast, private consumption is likely to accelerate ahead of the planned sales tax hike in October 2019, but to drop thereafter. Support will also come from fiscal policy.
- We recently revised our growth forecast already down to 0.9% for 2019. Risks are still tilted to the downside. Slowing growth makes it even more difficult for the BoJ to change its monetary policy stance ahead of the sales tax hike.