Bank of Japan Governor Haruhiko Kuroda is addressing parliment later today and there is now every chance that he hints at further easing after Japan’s forth quarter GDP data undershoot market expectations.
Growth for the December quarter printed an anaemic -0.4% against expectations of a fall of 0.3%. The annualised rate of growth slipped to -1.4% from 1% in the third quarter. Overall growth is now back where it was in the second quarter of 2015.
The fall in quarterly GDP is the 5th negative print for Japanese GDP since the 1.5% increase in the first quarter of 2014. That also means that Japanese nominal GDP sits below the level it was at when the GFC hit in 2008.
Looking at the breakdown it is clear the domestic economy still faces serious challenges with private consumption falling 0.8%. That was also worse than market estimates for a fall of 0.6% according to Reuters. Housing investment was also under pressure falling 1.2% while the external sector was helped by the weaker yen.
The data showed domestic demand contributed -0.5% to growth during the quarter the external sector (which includes trade and net exports) grew 0.1%.