Japan seen upgrading Q2 GDP on stronger business spending: Reuters poll

September 3, 2021

By Kantaro Komiya

TOKYO (Reuters) – Japan’s economy likely grew more than initially reported in the second quarter thanks to stronger business spending, a Reuters poll showed, though a resurgence of coronavirus infections is seen weighing on growth going forward.

Separate data due next week will likely show household spending rebounded in July from a year earlier, in a sign consumer sentiment recovered somewhat before the highly infectious Delta variant spread rapidly in Japan.

Revised gross domestic product (GDP) data is expected to show Japan’s economy grew an annualised 1.6% in April-June, more than a preliminary reading of 1.3% growth, the poll of 19 economists showed.

The stronger figure was in part due to an expected 2.0% rise in capital spending, a larger increase than a preliminary 1.7% gain, analysts projected. The world’s third-largest economy contracted 1.0% in the first quarter.

“The view that Japan’s economy remained stagnant in April-June is unchanged,” said Saisuke Sakai, senior economist at Mizuho Research Institute.

“Dragged down by the state of emergency curbs, the recovery was weak compared to the dip in January-March.”

Household spending likely rose 2.9% year-on-year in July after a 5.1% fall in June, the poll also showed, as the Olympics opened in Tokyo and a flattered comparison to the slump seen a year earlier.

Household spending was seen up a seasonally adjusted 1.1% in July from the previous month, according to the poll.

The government will release the revised second-quarter GDP data at 8:50 a.m. local time on Sept. 8 (2350 GMT on Sept 7), and announce household spending data at 8:30 a.m. on Sept. 7 (2330 GMT, Sept. 6).

Other data releases next week are expected to show the current account balance was in a surplus of 2.3 trillion yen in July, up from 905.1 billion yen in the prior month, analysts said.

(Reporting by Kantaro Komiya; Editing by Daniel Leussink and Sam Holmes)

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