Japan GDP growth seen slower in Q1, bouncing in Q2

TOKYO, May 1 (Reuters) Japan's economic growth likely braked sharply in the first three months of the year after a brisk pace in the previous quarter, though the slowdown may well be temporary, a preliminary Reuters survey showed on Monday.

The January-March gross domestic product (GDP) data, due out on May 19, will likely show the economy grew at a real 1.2 percent pace on an annualised basis from the previous quarter's 5.4 percent, according to the survey's median forecast.

Forecasts in the snap poll of seven economists were unusually wide-ranging, with growth estimates ranging from 0.1 percent to 2.1 percent. Reuters plans a larger poll when more economists produce their forecasts in the coming week or two.

Private-sector consumption growth ground to a halt after a big increase in October-December, though most economists expected a recovery trend to remain intact, helping GDP growth to rebound in the April-June quarter.

''In the GDP stats, January-March private sector consumption is likely to be weak, but given the improvements in employment and wages and consumption-related data other than the household survey, the underlying recovery is probably intact,'' said Taro Saito, senior economist at NLI Research Institute.

The monthly household spending data, a component of initial GDP estimates, is notoriously volatile due to its relatively small sample base. Some economists expect a weak consumption reading in the initial GDP report to be revised higher later on.

The forecast first quarter slowdown and second quarter pick-up in Japan's GDP resemble a slowdown in fourth quarter U.S. growth to 1.7 percent and a first quarter rebound in that country to 4.8 percent -- the fastest expansion in 2-{ years.

DEFLATION OVER? Economists were split on capital spending, with forecasts ranging from minus 0.9 percent to plus 2.2 percent.

While exports were strong, soaring oil prices inflated imports, muting the impact of external demand, or net exports.

Because imports are subtracted from exports to derive net exports, higher oil prices also put downward pressure on the overall GDP deflator -- the prices yardstick measuring the gap between real GDP and nominal GDP.

Goldman Sachs, which forecast a 1.2 percent decline from a year-earlier level in the Q1 GDP deflator, said the 15.9 percent rise in the imports deflator lopped off 1.6 percentage points from the overall GDP deflator.

Japan's nationwide consumer price index (CPI) has been rising from year-earlier levels since late last year, prompting the Bank of Japan to end its five-year-old ultra-easy monetary policy on March 9.

Ironically, much of the rise in the CPI has been due to higher oil prices.

Following is a table of the forecasts.

Q/Q Q/Q Consumption Capex External Deflator (annualised) contrib ---------------------------------------------------------------------------- Morgan Stanley 0.5 2.1 0.5 0.1 0.2 -1.1 Goldman Sachs 0.5 2.0 0.2 1.6 0.6 -1.2 NLI Research 0.4 1.8 -0.1 2.2 0.1 -1.4 Daiwa Research 0.3 1.2 0.1 0.5 0.1 -1.5 Norinchukin Research 0.3 1.1 -0.2 0.3 0.2 -1.1 Dai-ichi Life Research 0.1 0.5 0.1 -0.9 0.1 -1.5 Japan Research 0.0 0.1 0.2 -0.2 0.1 -1.1 ---------------------------------------------------------------------------- Median 0.3 1.2 0.1 0.3 0.1 -1.2 High 0.5 2.1 0.5 2.2 0.6 -1.1 Low 0.0 0.1 -0.2 -0.9 0.1 -1.5 REUTERS MP BST1855