UOB Group’s Senior Economist Alvin Liew and Senior FX Strategist Peter Chia give their views on the recently published GDP figures in the Japanese economy.

Key Quotes

“The contraction of Japan’s 4Q 2019 GDP was worse than expected, coming in at -1.8% q/q (- 7.1% annualized rate) versus the first estimate of -1.6% q/q (-6.3% annualized rate) as the contraction in business spending was deeper than what was first reported in February, offsetting the positive contributions from public demand, net exports and a slight improvement in the decline of private consumption.”

“We maintain a bearish stance on Japan’s growth outlook as we see Japan facing significant challenges in 2020. Based on our expectations that the collapse of private spending could extend well into 2020, together with the lingering trade headwinds, and the latest threat of the novel coronavirus (COVID-19), we believe that it is inevitable Japan will enter into a technical recession in 4Q 2019. For 2020, we see a high probability it will enter into a recession, and we project Japan’s GDP will contract by 0.8% in 2020.”