Japan's economy grew by 0.3% in the second quarter, falling short of forecasts
Japan's economy grew by 0.3% in April–June 2026 compared to the previous quarter, but the growth rate fell short of analysts' expectations. Data from the Japanese Cabinet Office show that this marks the third consecutive quarter of GDP growth, though the pace slowed from 0.5% in the first quarter.
Thirty-seven economists surveyed by the Japan Center for Economic Research had forecast quarterly growth of 0.5%. On an annualized basis, the Japanese economy grew by 1.1%, while the consensus forecast had predicted a 1.67% increase.
Private consumption remained unchanged in real terms, while capital expenditures fell by 1.2%. On an annualized basis, capital expenditures declined by 4.6%. These figures partially offset the strong contribution of exports to economic growth.
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Net exports added 0.5 percentage points to GDP growth, while domestic demand subtracted 0.2 percentage points. Norihiro Yamaguchi, a leading economist at Oxford Economics in Japan, expects sluggish growth in the second half of 2026 as companies pass on higher energy costs to consumers.
Japan imports nearly all of its crude oil. Price pressures on Japanese consumers have also intensified due to the weak yen: last month, the Japanese currency hit a 40-year low against the U.S. dollar. Weaker-than-expected GDP figures could complicate the Bank of Japan’s decision on interest rates in September. In June, the central bank raised its benchmark rate to 1%—the highest level in more than three decades.
As of 05:15 GMT on Monday, the Nikkei 225 index was up 0.3%. South Korea’s KOSPI gained 2.4%, and Hong Kong’s Hang Seng Index rose 1.6%, according to Al Jazeera English.
