Japanese GDP "Guesses" Are Collapsing; Here's The 3rd Arrow That Will 'Save' It

Japan’s GDP may have declined in April and May, implying an overall collapse for Q2 not seen since 2009. Bloomberg's Nowcast estimate suggests that the hope-strewn pre-tax-hike pile up of a +6.7% annualized GDP growth in Q1 will come crashing back to earth as consensus GDP for Q2 is -4.85% and even bigger based on Bloomberg's models. As Bloomberg's Tom Orlik warns, this could take markets by surprise. The good news is that Abe's 3rd arrow has yet to reach escape velocity (any day now); below we highlight the entire package and how it will save the world...

 

This is not what Abe wants to see...

 

Bloomberg's Tom Orlik notes that their Econometric model indicates it could significantly worse...

 

Consensus forecasts show Japan’s GDP growth contracting at an annualised 4.4 percent pace in the second quarter from the previous three-month period. The steeper drop in the economy projected by Bloomberg Nowcast might take the markets by surprise and increase pressure on the Bank of Japan to kick off a second round of easing... which is problem given the already high level of inflation.

 

But have no fear, the 3rd Arrow is here...

h/t @TomOrlik

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What is even more problematic for Abe is the continuing collapse in his approval rating (down 5pts to 47%):

The approval rating is the lowest since Prime Minister Shinzo Abe took power in December 2012, public broadcaster NHK reports, citing own poll; and the disapproval rating climbs 6 pct points to 38%.

And this...

  • ABE: NOT THINKING OF DISSOLVING PARLIAMENT AT THIS STAGE

So that's it... or war!