Sharp Japan GDP downgrade possible, affecting monetary policy

The government said on Tue it will revise GDP figures for Jan-Mar to reflect corrections made in construction orders data, and announce the findings on Jul 1.

Given the big downward revision to the construction orders data, the revised Jan-Mar GDP figures are likely to show the economy contracted more than expected, some analysts say.

Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute, expects the revision to show Japan's economy shrank an annualised 2.7% in the first quarter, much bigger than the current estimate of a 1.8% contraction.

The revision is likely to push down Japan's economic growth for the fiscal year that ended in Mar to 1.0% from 1.2%, and may lead to a downgrade in the current fiscal year's growth projections including for the Bank of Japan, he said.