Japan's GDP revised to 3.8% in Q2

Thanks to the revival of this 'missing ingredient'.

According to BBVA Research, improving investment leads to upward revision to Japan Q2 GDP.

Q2 GDP was revised up to 3.8% saar (0.9% q/q sa) from the preliminary reading of 2.6% saar (0.6% q/q sa), as capital spending, the missing ingredient until now in Japan’s economic revival, posted a strong increase.

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In particular, private non-residential investment growth was revised up to 1.3% q/q sa in Q2 from a preliminary reading of -0.1%, and public investment growth was revised up to 3.0% q/q sa (1st preliminary reading: 1.8%).

Looking ahead, we expect Japan’s recovery to continue in H2, and our current 1.7% full-year growth projection for 2013 now looks conservative.

Today’s data is further evidence that Abenomics is working to revive growth, and should help the government to make its case to proceed with the planned consumption tax hike in 2014-15, which is to be formally decided in early October.