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Japan Q2 growth misses forecasts on weaker spending, investment

Private consumption fell for the first time in eight quarters, while business investment also declined and exports offset weaker domestic demand, the Cabinet Office said.

  • On Monday, the Cabinet Office reported Japan's economy grew an annualized 1.1% in the April-June period, extending a three-quarter expansion but missing the 2.0% median market forecast.
  • Domestic demand weighed on output as private consumption remained flat and capital investment declined 1.2%, reflecting uncertainties from the Middle East conflict and rising energy costs.
  • External demand added 0.5 percentage points to growth, driven by resilient shipments of AI-related semiconductor equipment and Japanese hybrid vehicles, with a weak yen boosting translated earnings.
  • Traders see an 80% likelihood of a Bank of Japan rate hike at the September 18 policy meeting, with investors betting the central bank will proceed with tightening.
  • Meiji Yasuda Research Institute economist Kazutaka Maeda characterized the weakness as temporary, noting that government subsidies and solid wage gains should help underpin household spending ahead.
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The result is compared to 2.1% of the previous quarter and comes in the first full quarter hit by the war in Iran, which has increased energy for businesses and households in Japan.

·Las Condes, Chile
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  • 36% of the sources are Center, 35% of the sources lean Right
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ts2.tech broke the news on Sunday, August 16, 2026.
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