Japan’s Negative May GDP: A Blip or a Warning?
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This article is originally referred from Avatrade News.
Don’t Miss This Month’s Key Event in Japan.
Japan Gross Domestic Product (GDP) – Q1 2018 on Thursday, June 7th, 2018 at 23:50 GMT.
Early GDP figures published in May revealed that Japan’s economy contracted more than anticipated in the January to March quarter, breaking the country’s longest growth spurt since 1989.
Japan’s economy contracted by 0.6% in Q1 on an annualised basis – triple the expectations – and last year’s fourth quarter has been revised downwards from 1.6% to 0.6%!
Pundits still hope that the second reading of the year’s first quarter will show a 0.9% increase year over year, and economists indeed believe the contraction to be temporary.
Still, Abenomics is showing signs of a crack, and we’re left to ask if upcoming key GDP data will confirm the trend or indicate a recovery.
Will the key GDP data confirm the trend? Or will Japan’s economy recover?
Market experts divide into 2 groups:
Bullish factors for the JPY
- Economists see this contraction as a temporary standstill.
- Geopolitical and trading uncertainty could support safe-haven demand for the yen.
Bearish factors for the JPY
- There is a risk of trade friction with the United States, which could weigh on exports.
- Japan’s acceleration in growth is coming to a halt.
What do you think? Will the USDJPY rise or fall?
What is the GDP and Why is it so important?
Japan’s Gross Domestic Product (GDP) is released by the Cabinet Office and measures the annualised change in the inflation-adjusted value of all goods and services produced by the economy.
It is considered the broadest measure of economic activity and the primary indicator of the economy’s health.
A higher than expected reading should be taken as positive/bullish for the JPY, while a lower than expected reading should be taken as negative/bearish for the JPY.
Original Source: Avatrade News