DBS Bank: Japan's GDP growth may continue to remain weak

ChainCatcher news, according to Jinshi reports, Japan's second quarter GDP data will be released on Friday. The DBS economic team expects that Japan's second quarter GDP growth rate may hover around 0%. They predict that the seasonally adjusted annualized growth rate will gently rise by 0.2%, just enough to offset the contraction in the first quarter. The momentum of exports in the second quarter has weakened, affected by a decline in exports to the U.S. and weak overseas demand.

Domestically, private consumption remains sluggish as wage growth lags behind inflation. The persistently weak GDP indicates that the Bank of Japan is unlikely to raise interest rates in the short term. Although the trade agreement reached with the U.S. helps alleviate tariff uncertainties, the Bank of Japan may want to see a stronger wage recovery and stable inflation before resuming policy normalization. Therefore, DBS maintains its forecast for a 25 basis point rate hike by the Bank of Japan in the fourth quarter.