Global Synchronous Recovery Collapses As Japanese GDP Plunges In Q1

Despite all the hype of a global synchronous recovery, Japan's Q1 Real GDP tumbled 0.6% QoQ (on an annualized basis) - the worst drop since Q4 2015 - and well below expectations.

Under the hood it's just as ugly...

  • Nominal GDP dropped 0.4% QoQ (vs expectations of a 0.1% gain)
  • Business Spending dropped 0.1% QoQ (vs expectations of a 0.4% rise)
  • Private Consumption was unchanged QoQ

And after 8 straight quarters of improvement - that was the longest stretch of uninterrupted growth since a 12-quarter run that ended in 1989 - Japan's economy shrank again in Q1...(and the previous quarter got revised sharply lower)

Excuses were ample...

“Consumer spending dipped because of weather reasons, heavy snow,” Hiroaki Muto, chief economist at the Tokai Tokyo Research Center, said before the results were released.

"We have to keep a close eye on whether there’s a recovery in the second quarter,” he said. "The dip is probably temporary, and I don’t see GDP contracting in the April-June quarter, but it’s possible that a longer-than-expected global economic soft patch is beginning to have an effect on the Japanese economy."

Bloomberg notes that the first-quarter slowdown likely sapped progress on inflation -- Goldman Sachs predicted core inflation fell in April to 0.7 percent. Yet most economists see GDP rebounding in the current quarter, fueled partly by better export growth and production (just as they did in Q1!!).

Of course, the great news is that this gives Kuroda and Abe ever more excuses to repress ever more financial instruments and monetize ever more debt for just a little bit longer.

If you look carefully you will see USDJPY reacting to this dismal number...

As Bloomberg's Mark Cranfield remarked: "The jokes about the BOJ never being able to exit QE might not be as funny to Japanese policy makers after this. "

Still if that data was not enough for you to see, maybe this will help...

Global Macro Surprise data is its worst since March 2016 - the global growth scare - and all because China's credit impulse has reversed.


107cicero Tue, 05/15/2018 - 20:12 Permalink

Japan sucks what else is new? The US is going through what the Japs did in the early 90's to now.  Crony capitalism, subsidising the corporate dinosaurs, printing money.  Fucking shitty.

Going to get even shittier....

Bam_Man Mr. Pain Tue, 05/15/2018 - 20:29 Permalink

They will be selling EVERYTHING - including the kitchen sink - because they have to, to survive. The elderly Japanese are not living off the interest (.001%) on their Postal Savings Accounts. They are liquidating assets - en masse - into what will eventually be a "no bid" market.

BTW, this is coming soon to a country near you (USA). A deflationary black hole, from which there is NO escape.

In reply to by Mr. Pain

chestergimli Bam_Man Tue, 05/15/2018 - 21:17 Permalink

Isaiah 26:5-8 For he shall bring down them that dwell on high, the high city he shall lay low.  He shall bring it down even to the ground, he shall pull it down even to the dust.  The foot shall tread it down, the feet of the poor, the steps of the needy.  The way of the just is right, the path of the just is right to walk in.  And in the way of thy judgements, O Lord, we have patiently waited for thee:    Thy name and thy remembrance are the desire of the soul.




In reply to by Bam_Man

Jeffrozz1234 Wed, 05/16/2018 - 01:09 Permalink

THERE it is. Japan is going to reck this thing as usual.  Is this the bearish wildcard that has been hinting on.   Their call to go long stawks on May 3rd was incredible. Does anyone know if they have given sell signal yet.