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Japan's second quarter GDP seen revised down on smaller capex gains
September 6, 2017 / 2:54 AM / 16 days ago

Japan's second quarter GDP seen revised down on smaller capex gains

People cross a street in the Shinjuku shopping and business district in Tokyo, Japan May 17, 2017. Picture taken May 17, 2017. REUTERS/Toru Hanai

TOKYO (Reuters) - Japan’s economy likely grew at a slower pace than initially estimated in the second quarter, on expected downward revisions in capital spending growth, a Reuters poll showed on Wednesday.

The world’s third-largest economy is seen expanding at an annualized pace of 2.9 percent in April-June, the poll of 17 analysts found, which would be a significant downward revision from the 4.0 percent growth seen in the preliminary data.

That would translate into 0.7 percent growth from the previous quarter, revised down from an initial reading of 1.0 percent, the poll showed.

“Capital spending is likely be revised down. But overall, the economy maintained its high rate of growth helped by consumer spending and public investment,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.

He expects the economy will continue its recovery in July-September and after.

“Both domestic and external demand will likely perform well thanks to the global economic recovery. But we need to watch downside risks from China’s economy and a possible downturn in consumer spending due to bad weather.”

Capital expenditure, a major component of gross domestic product, is expected to have risen 0.5 percent over the quarter, much slower than the 2.4 percent rise shown in the preliminary data.

Japanese companies curbed their pace of investment in plant and equipment in April-June, suggesting the government may revise down its initially rosy estimate for economic growth in the second quarter.

“There is no change to the notion that the economy kept its solid tone but a positive surprise of the high rate of growth in the preliminary data for April-June may turn out to be an illusion,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.

The Cabinet Office publishes the revised GDP data at 8:50 a.m on Sept. 8 (2350 GMT Sept. 7).

Reporting by Kaori Kaneko; Editing by Sam Holmes

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