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Bill Diviney, senior economist at ABN AMRO, points out that Japan’s Q1 GDP surprised to the upside at 2.1% qoq annualised, well above consensus (-0.2%) and their (0.5%) expectations, as well as trend growth (c.1%), but the details paint a far less rosy picture of the economy.

Key Quotes

“Both private consumption and business fixed investment fell on the quarter, each subtracting 0.2pp from annualised growth. At the same time, the main positive contributions came from net exports (+1.5pp) and inventories (+0.6pp). However, exports actually plunged -9.4% on the quarter, and the only reason for the positive trade contribution is that imports fell at a much faster pace, by -17.2%.”

“Similar to other regions, the strength in Q1 looks unsustainable – The story of unusual net export and/or inventory build contributions is consistent with what we have seen in some other advanced economies, notably the US and the UK, and suggests the current strength in global growth is unsustainable.”