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Japan second-quarter GDP growth seen slowing but domestic demand offsetting some export pressure - Reuters poll

Japan second-quarter GDP growth seen slowing but domestic demand offsetting some export pressure - Reuters poll
FILE PHOTO: An industrial port is pictured in Tokyo, Japan, May 23, 2019. REUTERS/Kim Kyung-Hoon -
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KIM KYUNG-HOON(Reuters)
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TOKYO (Reuters) – Japan’s economic growth likely slowed in the second quarter as cooling global demand and trade tensions weighed on exports, but brisk domestic demand offset some of the external pressure, a Reuters poll showed on Friday.

Gross domestic product (GDP) is forecast to have expanded an annualised 0.4% in April-June, decelerating from a revised 2.2% in the first quarter, the poll of 17 economists showed.

That would translate into a 0.1% gain on a quarter-on-quarter basis, compared with a revised 0.6% in the January-March quarter, the poll showed.

Japanese exports have fallen seven straight months through June, pressured by the U.S.-China trade war and weakening global demand, particularly for hi-tech electronics.

External demand – or exports minus imports – likely subtracted 0.5 percentage point from growth in the second quarter, the poll found, after it added 0.4 percentage point to growth in January-March.

Domestic demand, however, likely rebounded in the April-June quarter, as a 10-day holiday boosted spending on services, cars and home appliances, analysts said.

Private consumption, which accounts for about 60 percent of GDP, likely rose 0.6% for the quarter, reversing from a 0.1% fall in the first quarter.

“Consumer spending contributed to the third straight quarterly growth,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“In addition to that, capital spending was solid. So domestic demand likely covered falls in foreign demand.”

The Cabinet Office will publish the GDP data on Aug. 9 at 8:50 a.m. Japan time (2350 GMT, August 8).

The poll also found Japan’s household spending likely rose 1.4% in June from a year earlier, up for a seventh straight month. In May, household spending rose at the fastest pace in four years.

“The pace of rises in household spending likely slowed down after big jump in May. But employment and wage conditions are favourable, which appear to be supporting consumer spending,” said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.

The government will announce household spending data at 8:30 a.m. Japan time on Tuesday.

The poll also found the nation’s current account balance is set to show a 1.14 trillion yen (£8.8 billion) surplus in June, trimming from 1.59 trillion yen in May.

The government will announce current account balance data at 8:50 a.m. on Aug. 8.

(Reporting by Kaori Kaneko; Editing by Kim Coghill)

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