Japan’s Q2 economic rebound likely dull

Japan’s economy likely recovered slightly in the second quarter from a steep slump at the start of the year, a Reuters poll showed, as solid exports and capital expenditure cushioned some of the blow to consumption from the coronavirus pandemic.

But analysts expect the world’s third-largest economy to lag other advanced nations emerging from the doldrums, as expanded state of emergency curbs and a resurgence in infections weigh on household spending.

“There won’t be much of a rebound from the first quarter’s big contraction. The data will show the economy continues to stagnate,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Conditions won’t improve much in July-September, as expanded Covid-19 curbs and surging infections hurt consumption during the summer.”

Preliminary gross domestic product (GDP) data will show the economy grew an annualised 0.7 per cent in April-June, after a 3.9 per cent slump in the first quarter, according to analysts polled by Reuters. On a quarter-on-quarter basis, GDP likely grew 0.2 per cent, the poll showed.

Capital expenditure is forecast to have expanded 1.7 per cent as manufacturers ramped up spending to make up for investment delays caused by the pandemic last year, the poll showed.

Consumption shrank 0.1 per cent as the health crisis continued to weigh on service spending, though the drop is smaller than the previous quarter’s 1.5 per cent decline, the poll showed.

While exports remain strong, external demand likely shaved 0.1 per cent point off growth as imports rose more than overseas shipments, according to the poll.