Sunday, November 15, 2009

Japanese GDP... 4.8% Growth, but Ugly?

EconomPic detailed Japan's odd Q2 GDP print in which real GDP rebounded to positive territory for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first time since Q4 2007, even as nominal GDP continued to contract:

This has happened before (but real GDP has never been higher, while nominal GDP was negative).
That is... until this release.



The issue with any recovery in real only terms is that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 country's debt (and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a ton in Japan) remains in nominal terms. Thus, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fact that Japan produced more (4.8% quarter over quarter annualized more in real terms), but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 overall value of that production is still less in Yen terms (-0.3% in nominal space) makes it difficult to service that debt. It is not a surprise cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cost of credit insurance on Japanese sovereign debt has risen during this "recovery". Per cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 WSJ:
Canary in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 coal mine? The cost of insuring Japanese government bonds against default has doubled to 0.75 percentage point in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past three months, as markets fret about debt issuance. Credit risk is assuming ever-greater stature in government-bond markets previously blicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ly assumed to be risk-free.

Its debt-to-gross-domestic-product ratio is set to rise to a staggering 227% in 2010, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 International Monetary Fund forecasts, making it particularly exposed to any rise in market interest rates. Japan's aging population is a crucial concern, driving a change from saving, much of which went into JGBs, to consuming.
Japanese government officials seem to share cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 concern that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "strong" print may not be all it initially seems. Per Bloomberg:
The acceleration in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 world’s second largest economy is projected to fade in coming quarters as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 impact of stimulus spending wanes and job losses restrain consumer spending. Prime Minister Yukio Hatoyama said cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 economy remains “worrisome” and that anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r supplementary budget is “probably” warranted.
I second that and will repeat cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 question I posed last quarter; how strong is end-user demand really if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 price deflator increases GDP a full 5% quarter over quarter (annualized)?

Source: ESRI

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