According to some experts, a rare unexpected adjustment to Japan's GDP for the first quarter might result in a severe reduction, which could have an impact on the central bank's growth projections and the timing of its next interest rate rise.
The government said on Tuesday that it will release the updated GDP estimates for the months of January through March on July 1st. The revisions will take into account the changes made to the building orders data.
According to some experts, the revised January–March GDP estimates would probably reflect a worse than projected contraction of the economy given the significant negative revision to the construction orders data.
Senior executive economist Yoshiki Shinke of the Dai-ichi Life Research Institute anticipates that the revision would reveal that Japan's GDP contracted by an annualised 2.7% in the first quarter, far more than the 1.8% contraction now estimated.
According to him, the change is likely to cause Japan's economic growth for the fiscal year that ended in March to drop from 1.2% to 1.0%, and it may also cause the Bank of Japan's growth predictions for the current fiscal year to be downgraded.
"The revision may have an impact on monetary policy, which is concerning," the speaker said, obliging the BOJ to lower its growth estimates in newly released quarterly forecasts that are due on July 30-31.
A lot of experts predict that at some point this year, the central bank will raise interest rates from their present near-zero levels; some even place bets on that happening at the July meeting.
"It could make it somewhat difficult for the BOJ to justify raising interest rates if it were to sharply downgrade its fiscal 2024 forecast," Shinke said.
According to BOJ projections, the GDP will grow by 0.8% in the 2024 fiscal year. It has indicated that it is prepared to hike interest rates in the event that the economy performs as predicted, which increases the likelihood that inflation will consistently reach its 2% objective.
Data released on June 10 revealed that Japan's GDP fell by an annualised 1.8% in the first quarter due to sluggish exports and consumption, following a 0.4% gain in the previous quarter. According to economists, the July 1 revision can also result in lower GDP estimates for the third and fourth quarters of the previous year.
(Source:www.usnews.com)
The government said on Tuesday that it will release the updated GDP estimates for the months of January through March on July 1st. The revisions will take into account the changes made to the building orders data.
According to some experts, the revised January–March GDP estimates would probably reflect a worse than projected contraction of the economy given the significant negative revision to the construction orders data.
Senior executive economist Yoshiki Shinke of the Dai-ichi Life Research Institute anticipates that the revision would reveal that Japan's GDP contracted by an annualised 2.7% in the first quarter, far more than the 1.8% contraction now estimated.
According to him, the change is likely to cause Japan's economic growth for the fiscal year that ended in March to drop from 1.2% to 1.0%, and it may also cause the Bank of Japan's growth predictions for the current fiscal year to be downgraded.
"The revision may have an impact on monetary policy, which is concerning," the speaker said, obliging the BOJ to lower its growth estimates in newly released quarterly forecasts that are due on July 30-31.
A lot of experts predict that at some point this year, the central bank will raise interest rates from their present near-zero levels; some even place bets on that happening at the July meeting.
"It could make it somewhat difficult for the BOJ to justify raising interest rates if it were to sharply downgrade its fiscal 2024 forecast," Shinke said.
According to BOJ projections, the GDP will grow by 0.8% in the 2024 fiscal year. It has indicated that it is prepared to hike interest rates in the event that the economy performs as predicted, which increases the likelihood that inflation will consistently reach its 2% objective.
Data released on June 10 revealed that Japan's GDP fell by an annualised 1.8% in the first quarter due to sluggish exports and consumption, following a 0.4% gain in the previous quarter. According to economists, the July 1 revision can also result in lower GDP estimates for the third and fourth quarters of the previous year.
(Source:www.usnews.com)
