Japan's economy sputters: Q3 GDP growth seen at just 0.3%

Japan's economy likely slowed to a crawl between July and September. A Reuters poll of 16 economists sees annualized GDP growth at just 0.3%, down from 1.4% in April-June. Without annualization, growth was a barely-there 0.1%. It would still mark a fourth straight quarterly expansion, but the momentum is fading fast.

The drag came from two key engines. Private consumption, which makes up more than half of GDP, is expected to have shrunk 0.2% — its first contraction in seven quarters. Net external demand subtracted 0.4 percentage points, a reversal from the previous quarter's 0.5-point boost. Imports rose, partly on alternative crude oil procurement, while exports couldn't keep pace.

Analysts at SMBC Nikko Securities noted service consumption was firm, but durable goods took a hit from policy-related factors, and non-durable goods suffered from rising inflation. Capital expenditure offered some relief, rebounding to 1.5% growth after a 0.9% decline in the prior quarter.

The weak data lands right as the Bank of Japan weighs another interest rate hike. Many analysts expect the next move as soon as next month. The GDP figures will be one of the key inputs for that decision, and a soft print could give policymakers pause.

The government will release the preliminary third-quarter GDP data on November 16 at 8:50 a.m. local time (2350 GMT on November 15). Until then, the poll offers a preview of an economy losing steam.