Coronavirus | Japan's economy likely to slow in second quarter

Coronavirus | Japan's economy likely to slow in second quarter

Japan's Q 2 economic rebound likely feeble as COVID - 19 impact persists: Reuters poll Pedestrians wearing protective face masks, following the coronavirus disease outbreak, walk past a showroom window of a department store in Tokyo.

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

However, analysts expect the world's third largest economy to lag other advanced countries emerging from the doldrums, as expand state of emergency curbs and a resurgence of infections weigh on household spending.

What will be the biggest rebound aft of the big contraction of the first quarter. The data will show the economy continues to stagnate, said Yoshiki Shinke, chief economist of Dai-ichi Life Research Institute.

Conditions won't improve much in July-September as surging COVID19 curbs and expanding infections hurt consumption during the summer.

Preliminary Gross Domestic Product data will show that the economy grew an annualized 0.7% in April-June, after a 3.9% slump in the first quarter, according to analysts polled by Reuters. The poll on a quarter to quarter basis showed GDP likely grew 0.2%, the poll showed.

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

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

While exports remain strong, overseas demand likely shaved a 0.1% point off growth as imports grew more than external orders, according to the poll.

On Aug. 16 the government will release GDP data at 8: 50 a.m. The company is out of the U.S. for six years and expected to release GDP data at 2:49 p.m.

Separate data is expected to show an increase in wholesale inflation in July from one year earlier, a sign higher raw material costs are hitting corporate margins, the poll showed.

On August 12, the data is due at 8: 50 a.m. on Aug. 12 for your convenience.

The first contraction in Japan's economic sector in the first quarter marked the first decline in three quarters as caps on activity to combat the pandemic hit consumption.

While robust global demand has boosted exports and capital expenditure, a major chip shortage has affected Japan's auto production and clouded the outlook for Japanese manufacturers.

Growth in exports and output appears to be decreasing, said Mari Iwashita, chief market economist at Daiwa Securities.

Japan's factory output will experience volatility if chip shortage lasts longer than expected.