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According to the latest Reuters poll of 19 economists, Japan’s economy is likely to show a deeper-than-expected contraction in the second quarter, as capital expenditure took a hit from the coronavirus pandemic.

Key findings

“Japan’s gross domestic product (GDP) is expected to have shrunk an annualized 28.6% in April-June, more than a preliminary reading of a record 27.8% contraction.

The main culprit behind the revision is an expected 3.1% drop in capital expenditure, a bigger fall than a preliminary 1.5% decline, the poll showed.

Household spending in July likely fell 3.7% from a year earlier, more than a 1.2% drop in June, hit by bad weather and social distancing policies to contain the pandemic.

Core machinery orders, a leading gauge of capital expenditure, likely rebounded, rising 1.9% in July after a 7.6% decline in June, offering some hope of a pick-up in corporate spending appetite.”

The GDP report is due for release on September 7 at 2350 GMT while the Japanese leadership election is scheduled on Sept 14.

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