GDP External Demand QoQ

Officially the Net Exports of Goods and Services contribution, it is the external demand leg of Japanese GDP. It comes from the Quarterly Estimates of GDP, the quarterly compilation of the Cabinet Office Economic and Social Research Institute under 2008 SNA rules. It covers the whole economy on the expenditure approach in real, chain-linked and seasonally adjusted terms. It is not export growth, not the yen trade surplus, not change from the same quarter last year, and not domestic demand.

First Preliminary and Second Preliminary are the two quarterly vintages, released about 45 and 70 days after quarter end at 8:50 AM Japan time. It is a quarterly compilation, not a survey, built from annual estimates with monthly and quarterly data, filling a missing third month with model estimates.

Each release shows real GDP growth with its annualised rate, domestic and external contributions, component rates, income and price measures, and full time series tables. Seasonal adjustment reruns each release back to 1994, and the second vintage replaces the first with fuller data. Timing can shift, with annual source revisions and base year updates.

Two legs drive the reading, with imports subtracted, so either side can move it.

• Exports of Goods and Services: the positive leg, covering goods across about 400 commodities, services, visitor spending in Japan and financial intermediation (FISIM) exports.
• Imports of Goods and Services: the subtracted leg, covering goods, services, spending abroad and financial intermediation (FISIM) imports, so growth drags the reading down.

In the July-September 2024 Second Preliminary, released December 9, 2024, real GDP grew 0.3% quarter on quarter, or 1.2% annualised. Domestic demand added 0.5 points while net exports subtracted 0.2 points, so domestic strength carried growth despite a trade drag. Exports grew 1.1% for a 0.2 point lift, but imports grew 1.8% for a 0.4 point drag, netting to minus 0.2 points. Export growth still gave a negative reading because imports rose faster. Fuller data revised GDP from 0.2% to 0.3% and the external drag from minus 0.4 to minus 0.2 points.

1. Nominal trade: Estimate nominal exports and imports from trade and Balance of Payments data with adjustments, plus financial margin trade. Annual Balance of Payments revisions feed through to keep records consistent.
2. Deflation to real: Deflate each detailed goods and services item with its price index and link weights across years for real values. Use consumer price gauges for visitor spending, and chain link totals with one quarter overlap against yearly values, which do not add up exactly.
3. Seasonal adjustment: Adjust nominal and real series with X-12-ARIMA, choosing orders from 0 to 2 by minimum AIC, with outlier and leap year fixes. Financial margin trade stays unadjusted, and all adjusted series rerun back to 1994 with full re estimation each release.
4. Contribution: Subtract real import change from real export change, divide by prior real GDP and multiply by 100 for points. Headline GDP growth equals domestic demand points plus external demand points.
5. Worked example: With GDP at 555.0, exports rising from 100.0 to 101.1 add 0.2 points, while imports rising from 110.0 to 111.98 subtract 0.4 points. Net is minus 0.2 points, so 0.5 domestic points make 0.3% GDP growth despite rising exports.