Japan’s economy set to show 7 straight growth quarters

Japan’s quarter-on-quarter growth of 0.3 percent is expected after a revised 0.6 percent rise in the second quarter. (Reuters)
Updated 10 November 2017
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Japan’s economy set to show 7 straight growth quarters

TOKYO: Japan’s economy was expected have grown for a seventh straight quarter in July-September, a period of unbroken expansion last seen between 1999 and 2001, a Reuters poll found on Friday.
Gross domestic product (GDP) is expected to have grown at an annualized rate of 1.3 percent in the third quarter, the poll of 20 analysts showed.
That result would mark a seventh straight growth quarter, the longest period of expansion since an eight-quarter run from April-June 1999 to January-March 2001.
Quarter-on-quarter growth of 0.3 percent is expected after a revised 0.6 percent rise in the second quarter.
“Consumer spending was seen stalling in July-September but export growth likely supported solid economic expansion,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute.
The poll found that private consumption, which accounts for roughly 60 percent of GDP, probably slipped 0.4 percent in the third quarter, the first fall in seven quarters.
External demand — or exports minus imports — was seen contributing 0.4 percentage point to growth, the poll found, after it subtracted 0.3 percentage point from GDP growth in April-June.
Capital spending was seen rising 0.3 percent in the third quarter, growing for a fourth straight quarter, following a 0.5 percent rise the previous quarter.
“We forecast the economy will continue to grow as both domestic and external demand pick up thanks to the global economic recovery and a softer yen,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
“But there is downside risk from the Chinese economy and we also need to closely monitor geopolitical risk from the North Korean situation,” he said.
The Cabinet Office will announce the GDP data on November 15 at 850am.
The Bank of Japan’s corporate goods price index (CGPI), which measures the prices companies charge each other for goods and services, was seen likely to have risen an annual 3.1 percent in October, the poll found.
Such a result would mark a 10th straight rising month and the fastest annual rate of increase since October 2008, excluding the effect of a sales tax hike in 2014.
The central bank will release the CGPI data on November 13 at 850am Japan Time.


Oil prices rise but still set for third weekly drop on oversupply, US-China trade dispute

Updated 1 min 33 sec ago
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Oil prices rise but still set for third weekly drop on oversupply, US-China trade dispute

TOKYO: Crude prices rose on Friday but were set to drop for the week as concerns about oversupply and lower demand due to a possible economic slowdown caused by the trade conflict between the United States and China, the world’s two biggest oil users.
Brent oil rose 7 cents to $72.65 a barrel by 0354 GMT, after rising to $73.04 earlier in the day.
US West Texas Intermediate (WTI) was up 14 cents at $69.60 a barrel, after reaching a high of $70.03 earlier.
However, both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to drop 3.6 percent and WTI to fall by 2 percent.
Prices have been dragged down by concerns about oversupply as some production returned after outages, while trade tensions between the US and China stoked fears of damage to their economies and commodities demand.
Saudi Arabia had moved on Thursday to allay fears of oversupply, which had supported prices.
But concerns about US and China are coming to fore again as China’s currency falls, said Stephen Innes, head of trading APAC at OANDA brokerage.
“Risk sentiment is wobbling, which I believe is attributed to PBOC pushing the RMB complex lower via the fix,” Innes said. “Markets are now nervous, not only about a trade war, but also a currency war.”
The People’s Bank of China (PBOC) on Friday lowered its mid-point for the yuan for the seventh straight trading day to the lowest in a year.
With China showing little signs of arresting its currency’s depreciation, the yuan promptly retreated to a near 13-month low.
Lower oil demand in the United States and China caused by an economic slowdown from their trade war would have oversized impacts on the market.
The US accounted for 20.2 percent of global oil demand in 2017 while China consumed 13 percent of the world’s oil last year, according to the BP Statistical Review of Energy.
There was some support for prices based on comments from Saudi Arabia, the world’s biggest oil exporter, that it would cut crude shipments.
The country expects exports to drop by roughly 100,000 barrels per day in August as it works to ensure it does not push oil into the market beyond customers’ needs, the kingdom’s Organization of the Petroleum Exporting Countries Governor Adeeb Al-Aama said.
“Despite the international oil markets being well balanced in the third quarter, there will still be substantial stock draws due to robust demand and seasonality factors in the second half,” Al-Aama said in a statement.
He also said concerns that Saudi Arabia and its partners are moving to substantially oversupply the market are “without basis.”