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The final revision for Japan’s Gross Domestic Product has arrived.

Japanese GDP

Q4 GDP -1.7% annualised compared with -6.3% the flash reading.

Japan Oct-Dec revised real GDP -1.8% QoQ (prelim -1.6%, Reuters poll -1.7%).
Japan Oct-Dec revised real GDP annualised -7.1% (prelim -6.3%, poll -6.6%).
Japan Oct-Dec revised capex -4.6% QoQ (prelim -3.7%, poll -4.3%).
Japan Oct-Dec revised private consumption -2.8% QoQ (prelim -2.9%).
Japan Oct-Dec revised net external demand contribution to GDP +0.5 pct point (prelim +0.5 pct point).
Japan Oct-Dec revised domestic demand contribution -2.3 pct point (prelim -2.1 pct point).
Japan Oct-Dec revised GDP falls at fastest pace since April-June 2014 – govt data.

FX implications

The markets were in expectation of a print slightly below the original estimate at -1.7%. “This weak number reflects the fragility of Japan’s economy ahead of COVID-19,” analysts at Westpac explained. The yen is picking up a safe haven bid regardless of the nation’s poor economic backdrop and prospects of a technical recession. How much longer the yen can carry such a status will depend on the Federal Reserve’s next move and US economic data. The US dollar, for the time being, is unwinding its carry trade bias considering an additional 50 basis point rate cut is being priced in. 

Description of GDP

The Gross Domestic Product released by the Cabinet Office shows the monetary value of all the goods, services and structures produced in Japan within a given period of time. GDP is a gross measure of market activity because it indicates the pace at which the Japanese economy is growing or decreasing. A high reading or a better than expected number is seen as positive for the JPY, while a low reading is negative.