Japan second-quarter GDP grows 1.1% on an annualized basis, missing expectations — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Japan's GDP expanded 1.1% annualized in Q2, missing the 2% consensus and decelerating from 2.1% in Q1, with the quarter-on-quarter rise of 0.3% also short of the 0.5% expected
- Exports beat expectations all three months and added 0.5 percentage points to GDP, but the gain was driven by yen weakness rather than higher shipment volumes
- Domestic demand dragged growth down by 0.2 percentage points, a drop Oxford Economics' Norihiro Yamaguchi attributed mainly to public inventories — specifically the government's release of national oil reserves to cope with the Middle East conflict
- Consumption and business investment both shrank on a quarterly basis, with non-durable goods purchases and services dipping amid worsened consumer sentiment
- Bank of Japan raised its FY2026 (ending March 2027) GDP growth outlook to 0.6% from 0.5%, pointing to high crude oil prices partially offset by government measures to curb oil costs for households and rising global AI-related demand, given Japan's role in the semiconductor supply chain
- Oxford Economics' Norihiro Yamaguchi warned the consumption boost from policy measures is already fading and that inflation will increase in H2 as firms pass on higher costs, deteriorating consumer purchasing power
Why it matters: Japan's 1.1% headline conceals a weaker picture: exports rose on yen mechanics rather than competitiveness, domestic demand fell 0.2 points partly because the government drained its own oil reserves, and with economists forecasting H2 inflation to squeeze purchasing power further, the underlying trajectory is worse than the GDP print suggests.
Ask SkimNews
