Japanese Economy Monthly Forecast (May 2019)

▶ Although real GDP in Q1 expanded for the second consecutive quarter, there are reasons for concern as the  demand-side GDP components declined QoQ. Growth was mainly driven by the expansion in private inventory changes and declining imports.

▶ For Q2, we forecast real annualized GDP growth of +0.9% (expenditure side). The production-side forecast is an annualized +1.2%. The forecasts from the past three weeks, however, suggest a negative trend. We forecast a GDP deflator of -0.0% QoQ in Q2.