PREVIEW-Japan Q3 GDP seen +0.6 pct q/q, +2.5 annualised

(For more stories on the Japanese economy, click [ID:nECONJP])

* WHAT: Japan preliminary third-quarter GDP

* WHEN: 8:50 a.m., Nov. 15 (2350 GMT, Nov. 14)

* REUTERS FORECAST: Median +0.6 pct qtr/qtr vs Q2 +0.4 pct

By Akiko Takeda

TOKYO, Nov 1 (BestGrowthStock) – Japan’s economic growth likely picked up in
July-September due chiefly to a last-minute boost from expiring stimulus steps,
a Reuters poll showed, but analysts say a steep slowdown is likely in the
ensuing quarter as exports lose steam and consumption cools.

Third-quarter gross domestic product likely rose 0.6 percent from the
previous quarter, or an annualised 2.5 percent, the poll of 23 economists
showed. That would be faster than April-June’s 0.4 percent quarter-on-quarter
rate, or 1.5 percent annualised.

“The economy was stronger only because of one-time factors in the latest
quarter but those have vanished, and exports are set to stagnate on slower U.S.
and Chinese economies,” said Takeshi Minami, chief economist at Norinchukin
Research Institute.

“The question is how long and how serious Japan’s slowdown will be … The
yen strength shows no sign of abating and, if prolonged, a strong yen will
likely depress companies’ capital spending.”

Economists estimate that personal consumption, which makes up about 60
percent of the economy, climbed 0.9 pct, up from a flat reading in the previous
quarter, on last-minute demand for low-emission cars before government subsidies
expired in September and ahead of an Oct. 1 cigarette sales tax hike.

Net external demand, or exports minus imports, is expected to have made no
contribution to gross domestic product, however, after a 0.3 point contribution
in the second quarter.

Exports, which had led the economy’s recovery from the global financial
crisis, slowed for a seventh consecutive month in September due to the yen’s
jump and moderating growth in overseas economies.

Economists expect corporate capital spending to have expanded 0.7 percent,
less than half the 1.5 percent rise in the previous quarter.

As the effects of stimulus measures fade, many analysts say Japan’s economy
may contract in the October-December quarter as the yen remains just a stone’s
throw away from a post-war record high against the dollar, hurting the global
competitiveness of Japanese firms.

Acknowledging the pain inflicted by the yen’s strength, the government
downgraded its view of the economy last month for the first time in more than a
year.

The Bank of Japan also surprised markets on Oct. 5 by cutting interest rates
virtually to zero and pledging to create a 5 trillion yen ($62 billion) fund for
buying assets ranging from government bonds to corporate debt and
exchange-traded funds.

But economists warned that neither the central bank’s emergency measures,
nor a modest 5.05 trillion yen supplemental budget planned by the government,
offered the scale to prop up growth rates or tackled key problems such as
stagnant bank lending that are holding back the economy.

“Although the government is scurrying to compile a supplemental budget, the
planned stimulus spending is unlikely to be powerful enough to shore up the
economy,” said Kyohei Morita, chief economist at Barclays Capital Japan.

Following are economists’ forecasts for the preliminary July-September GDP
data (quarter-to-quarter percentage changes, except for external demand which is
in percentage points).

Q3 GDP ANNUALSD CONSMTN CAPEX EXTNL

——————————————————————-

Median 0.6 2.5 0.9 0.7 0.0

High 1.1 4.5 1.6 2.0 0.2

Low 0.4 1.7 0.5 -1.4 -0.3

——————————————————————-

Itochu Corp 1.1 4.5 1.6 0.4 0.1

Dai-ichi Life Research 0.9 3.6 1.2 0.7 0.1

Monex 0.8 3.4 1.1 2.0 -0.3

Mitsubishi UFJ Morgan Stanley 0.8 3.3 0.9 0.9 0.1

Mitsubishi UFJ R & C 0.7 2.9 0.9 0.6 0.0

Norinchukin Research 0.7 2.9 0.7 0.8 0.1

Mizuho Sec R & C 0.7 2.8 0.9 1.1 0.0

Mizuho Research Institute 0.7 2.7 0.8 0.3 0.1

Citi 0.7 2.6 0.7 0.9 0.1

Japan Research Institute 0.6 2.5 0.9 1.0 0.1

Barclays 0.6 2.5 1.4 0.4 -0.2

JPMorgan Chase 0.6 2.5 1.1 1.0 -0.1

UBS 0.6 2.5 0.5 1.5 0.2

Shinkin Central Bank 0.6 2.4 0.8 0.9 0.0

Nikko Cordial Securities 0.6 2.5 0.9 0.7 -0.1

Bank of Tokyo-Mitsubishi 0.6 2.3 0.8 0.5 0.1

NLI Research 0.5 2.2 0.6 0.6 0.1

Sumitomo Mitsui Asset 0.5 2.1 0.8 0.6 -0.1

Daiwa Institute of Research 0.5 1.9 0.9 0.3 -0.2

Credit Agricole/Calyon CIB 0.5 1.9 0.6 0.7 -0.2

Nomura Securities 0.5 1.9 0.6 2.0 -0.1

Meiji Yasuda Life Insurance 0.5 1.8 0.7 1.4 -0.3

Mitsubishi Research Institute 0.4 1.7 1.3 -1.4 -0.2
($1=80.65 Yen)
(Writing by Rie Ishiguro; Editing by Edmund Klamann)

PREVIEW-Japan Q3 GDP seen +0.6 pct q/q, +2.5 annualised