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Japan’s April-June gross domestic product is expected to be revised down after marking an annualized 27.8 percent drop on a preliminary basis, the biggest contraction in the post-World War II period.

The average forecast among 10 private think tanks is for a 28.7 percent drop in price-adjusted real GDP from the previous quarter, even worse than the preliminary result announced by the Cabinet Office last month.

The think tanks released their fresh forecasts after Finance Ministry data Tuesday showed that nonfinancial companies’ capital spending in April-June dived 11.3 percent from a year before as corporate earnings deteriorated and appetite for capital expenditures waned due to the novel coronavirus crisis.

The 11.3 percent drop was the steepest decline since the 11.5 percent fall marked in January-March 2010 amid lingering effects of the global financial crisis triggered by the 2008 collapse of U.S. investment bank Lehman Brothers.

The preliminary GDP report showed that capital spending for the first quarter of fiscal 2020 fell 1.5 percent from the previous quarter on a nonannualized basis, better than an 8.2 percent drop in private consumption.

But the capital expenditures are expected to be revised down to a decrease of 3.2 percent, according to the average forecast by the think tanks.

“Capital spending will be revised down markedly, allowing us to confirm a decline in corporate appetite to invest,” Dai-ichi Life Research Institute Inc. said.

“The pace of decline in capital spending will accelerate further in July-September,” with effects from falling corporate earnings and plant utilization seen becoming evident from now, according to Mizuho Research Institute Ltd.

The Cabinet Office will announce revised April-June GDP data Tuesday.

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