Key View
- Preliminary data show that Japan’s real GDP increased by 0.2% q-o-q (annualised 0.9%), slightly stronger than our estimate of 0.1% q-o-q.
- We maintain our 0.6% 2024 growth forecast, which implies a 0.5% q-o-q expansion in Q4 supported by steady private consumption recovery and exports.
- We also maintain our 2025 annual forecast of 1.0% y-o-y as private consumption and export of automobile and semiconductor equipment to grow steadily.
Preliminary data show that Japan’s real GDP increased by 0.2% q-o-q (annualised 0.9%), slightly stronger than our estimate of 0.1% q-o-q (see chart below). The modest expansion was driven by a recovery in private consumption and exports. Indeed, private consumption growth surprised to the upside with a 0.7% y-o-y (0.9% q-o-q) rise in Q3, contributing 0.5 percentage points to headline growth. That marked a rebound from a 0.7% y-o-y fall in Q2 and outperformed our 0.4% forecast. Notably, non-durable goods grew strongly by 1.7% y-o-y, compared with 0.4% y-o-y in Q2. One reason is that summer bonuses on average matched the record high of 4.2% y-o-y growth for large companies. Another factor was the JPY40,000 in tax credits per household in June. Durable goods consumption also grew by 7.6% y-o-y in Q3, partly due to pent-up demand – a safety testing scandal had forced autos production to stop in Q1 and Q2. Meanwhile, exports grew by 0.1% q-o-q (1.5% y-o-y) as automobile and semiconductor equipment shipments remained robust thanks to resilience in the global economy.
Japan is experiencing a period of positive growth momentum, driven by effective economic policies and global market dynamics. The government’s strategic initiatives, including fiscal stimulus packages and monetary easing measures, have successfully reinvigorated economic activity, boosting consumer confidence and encouraging corporate investments. These efforts have fostered a resilient environment, allowing Japan to navigate global economic uncertainties more effectively.
Japanese industries, particularly technology and manufacturing, have played a crucial role in this growth trajectory. The commitment to innovation and quality has positioned Japan as a leader in high-tech markets, attracting substantial foreign investments. Additionally, the nation’s emphasis on sustainable energy and digital transformation has opened new avenues for economic expansion, aligning with global trends and catering to increasing demands for eco-friendly and digital solutions.
Looking ahead, Japan’s positive growth momentum is expected to persist, bolstered by a strong export sector and strategic economic partnerships. Continued investment in technology and infrastructure, along with efforts to address demographic challenges, will further sustain economic stability. By maintaining a focus on innovation and adaptability, Japan is well-positioned to continue its upward economic trajectory in an increasingly competitive global landscape.
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