Japanese economy

The Japanese economy has without doubt entered a sharp contraction, although GDP in Q3 declined only 0.1% q/q (Consensus: 0.0%, Danske Bank: -0.1%) after dropping 0.9% q/q in the previous quarter (revised down from earlier reported 0.7% q/q contraction). The Q3 figures were broadly in line with our expectations, with the weakness mostly driven by weaker net exports and corporate capital expenditures, while both private consumption and residential investments showed some resilience (see chart 2). Overall, private consumption was slightly better than expected and corporate capital expenditure slightly worse. Private consumption increased 0.3% q/q (Danske Bank: 0.1% q/q), while private non-residential investments declined sharply by - 1.7% q/q (Danske Bank: -1.0% q/q).