Japan second-quarter GDP seen revised down to 'unchanged' on subdued capital spending

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan's economic growth is expected to be revised down slightly to flat over April-June due to a decline in capital expenditure, a Reuters poll found, underscoring the view that any recovery in the current quarter will be modest.

A preliminary estimate last month saw economic growth grind to a virtual halt in the second quarter, posting just 0.2 percent annualized growth as the strong yen and weak demand took their toll on exports and capital spending.

The poll of 17 economists found the annualized growth rate of Japan's gross domestic product (GDP) was expected to be flat over April through June, slumping from 2.0 percent annualized expansion in the first quarter, a figure flattered by leap-year effects.

This would translate into a quarter-on-quarter reading of 0.0 percent, unchanged from the initial estimate.

Analysts expect any rebound in the current quarter to be modest as a recent run of weak export, factory output and household spending data highlighted the fragility of the Japanese economy.

"The economy counted on policy steps to offset weak private demand through expansion in public works and an increase in housing investment on low interest rates," said Atsushi Takeda, chief economist at Itochu Economic Research Institute.

"It's hard to see autonomous economic recovery. Unless overseas economies improve and the yen's gains ease, we must remain vigilant against the risk of the economy hitting new lows, until the planned economic stimulus is fully implemented."

Capital expenditure, a key component of GDP, was expected to show a fall of 0.4 percent for the quarter, unchanged from the preliminary estimate, the poll found.

The Cabinet Office will issue the revised GDP data at 8:50 a.m on Thursday (2350 GMT Wednesday).

Separate data from the finance ministry, out at the same time as the revised GDP figures, is likely to show Japan's current account balance posting a surplus of 2.090 trillion yen ($20.23 billion) in July.

That would top June's 974.4 billion yen surplus and would be the 25th straight monthly surplus in the balance of payments, helped by income from overseas investments, foreign tourists, and the trade surplus.

($1 = 103.3200 yen)

(Reporting by Tetsushi Kajimoto; Editing by Eric Meijer)

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