(MaceNews) – Here are the key Japanese economic and political events for the coming week.
REVISED 1Q GDP REPORT
— Monday, June 9, 2025
0850 JST (2350 GMT/1950 EDT Sunday, June 8) The Cabinet Office releases revised (second preliminary) GDP for January-March
Mace News median: -0.2% q/q (range -0.5% to -0.1%) vs. prelim -0.2%; -0.7% annualized (range -1.9% to -0.5%) vs. prelim -0.7%; +1.7% y/y (+1.3% to +1.8%) vs. prelim +1.7%
The second reading of Japan’s GDP data is expected to confirm that the wobbly domestic economy posted its first contraction in four quarters in the January-March period, down a slight 0.2% on quarter, or an annualized 0.7%, likely showing no to only limited revisions to the initial estimate of -0.2% (-0.7% annualized).
The preliminary Q1 GDP data released last month showed the slump was in payback for a technical jump in net exports in the previous quarter. It was also due to flat consumption amid high costs of living and the uncertainty over global growth and inflation triggered by the protectionist U.S. trade policy.
The GDP slip followed the 0.6% rise (annualized 2.4%) in the October-December quarter, when the solid growth was led by a technical rebound in net exports that was caused by a sharper-than-expected slump in imports and masks weak exports and domestic demand. It also came after the U.S. economy recorded its first contraction in three years in Q1, down an annualized 0.2%, following a solid 2.4% expansion in Q4 led by rush imports ahead of stiff Trump tariffs.
In the revised Q1 GDP data, domestic demand is forecast to have provided a positive 0.6 percentage point contribution (revised down from +0.7 point) to total domestic output in Q1, propped up by a 1.2% rise in business investment in equipment and software (vs. an initial +1.4%) and a rise in private-sector inventories (+0.3 point). Domestic demand trimmed Q4 GDP by 0.1 point and raised Q3 growth by 0.5 point.
By contrast, external demand (exports minus imports) is believed to have lowered the Q1 GDP by 0.8 point, as reported last month, after adding 0.7 point to the growth in the previous quarter.
Looking ahead, Japan’s economic performance in the April-June quarter is expected to remain subdued, likely marking the second straight contraction, as consumers stay frugal amid falling real wages, external demand remains uncertain and firms are still cautious about implementing their solid capex plans amid the global trade war instigated by the Trump administration.
Consensus forecasts for key components in percentage change on quarter except for private inventories and net exports, whose contributions are in percentage points. Preliminary figures are in parentheses.
GDP q/q: -0.2% (-0.2%); 1st drop in 4quarters
GDP annualized: -0.7% (-0.7%); 1st drop in 4quarters
GDP y/y: +1.7% (+1.7%); 3rd straight rise
Domestic demand: +0.6 point (+-0.7 point); 1st rise in 2quarters
Private consumption: +0.0% (+0.0%); flat after third rise in a row
Business investment: +1.2% (+1.4%); 4th straight rise
Public investment: +0.4% (-0.4%); 1st rise in 3 quarters vs. 3rd straight drop
Private inventories: +0.3 point (+0.3 point); 1st rise in 2 quarters
Net exports (external demand): -0.8 point (-0.8 point), 1st drop in 2 quarters
CORPORATE GOODS PRICES REPORT
–Wednesday, June 11, 2025
0850 JST (2350 GMT/1950 EDT Tuesday, June 10) The Bank of Japan releases May corporate goods price index (CGPI)
Mace News median: domestic CGPI +3.5% y/y (range +2.7% to +3.5%) vs. Apr +4.0%; +0.2% m/m (range -0.5% to +0.3 %) vs. Apr +0.2%
Producer inflation in Japan is expected to moderate further to an eight-month low of 3.5% in May after easing to 4.0% in April from 4.3% in March (the highest since +4.5% in June 2023) as weaker global demand and increased crude oil supply from OPEC producers have led to lower domestic fuel prices, which were capped by a new government subsidy.
The global growth and inflation outlook remains uncertain amid the trade war instigated by the Trump administration while the costs for some metals have fallen in light of eased tensions between Washington and Beijing over their trade rows.
On the upside, the year-on-year increase in the domestic component of the Bank of Japan’s corporate goods price index is supported by utilities costs as the government ended its three-month electricity and natural gas subsidies in March (bills paid in April). The upstream goods inflation was also pushed up by farm produce prices as the government’s release of reserves through rounds of tenders to wholesalers had failed to quell rice shortages that have kept the prices of the staple high. Eggs prices remained elevated in the aftermath of global bird flu outbreaks.
In a new development, the Ministry of Agriculture, Forestry and Fisheries under the new minister, reformer Shinjiro Koizumi, has canceled tenders and is now conducting direct sales of its reserves comprising old rice to wholesalers. This has helped bring down retail rice prices in early June, which should somewhat help ease upward pressure on processed food costs in the CGPI and CPI.
On the month, the domestic CGPI is forecast to post its ninth straight rise, up 0.2%, after rising 0.2% the previous month.
At its latest meeting on April 30-May 1, the Bank of Japan’s nine-member board voted unanimously to maintain the target for the overnight interest rate at 0.5%, as widely expected, amid high uncertainty over global growth and inflation sparked by stiff Trump tariffs, after having stood pat in March. In January, the panel voted 8 to 1 to raise the policy rate by another 25 basis points to 0.5% in its third hike during the current normalization process that began in March 2024.
The next policy meeting is scheduled for June 16-17.
The BOJ appears to be still on course for two more 25 basis point rate hikes that would eventually take the overnight interest rate target to 1%. The bank is in the process of normalizing its policy by gradually lifting the rates that had been in a range of zero and slightly negative until March 2024.
DIET TO DEBATE HIGH COST OF LIVING, U.S.-JAPAN TRADE TALKS, POSSIBLE NO-CONFIDENCE MOTION
–Wednesday, June 11, 2025
1800 JST (0900 GMT/0500 EDT) Prime Minister Shigeru Ishiba and the main opposition Constitutional Democratic Party of Japan’s Yoshihiko Noda (prime minister from 2011 to 2012) and other leaders hold their third round of debate in the Diet to discuss high costs of living, Japan-U.S. trade talks, a possible move by the opposition camp to submit a no-confidence motion against his Cabinet among other issues.
Japanese news media have reported by quoting unnamed ruling party sources that Ishiba is considering dissolving the House of Representatives, the lower chamber of parliament, and calling snap elections if the opposition parties challenge his leadership with a no-confidence motion before the current 150-day Diet session ends on Sunday, June 22.
Prime Minister Ishiba was re-elected in a rare parliamentary run-off vote on Nov. 11 after the ruling coalition lost a majority in the Lower House general election about two weeks earlier as many voters, weary of high costs, punished Ishiba’s conservative Liberal Democratic Party for its political funding scandal.
In the 465-seat lower chamber, the LDP won 191 seats, down sharply from 256 seats it had held before the Sept. 27 election. Komeito was also reduced by eight seats to 24. Together, the coalition has only 215 seats, short of a simple majority of 233. By contrast, the opposition CDPJ increased by 50 to 148 seats while the Democratic Party for the People also saw its seats rise to 28 from seven.
AloJapan.com