Japan’s economy slows, missing growth forecasts
Summary
Japan’s economy grew by 0.3% in the second quarter of 2026, which is slower than expected and less than the previous quarter’s growth. The growth was mainly supported by strong exports, but weak consumer spending and lower business investments weighed down overall economic activity.Key Facts
- Japan’s GDP grew 0.3% from April to June 2026, below the forecast of 0.5%.
- This growth marks the third quarter in a row of economic expansion.
- On an annualized basis, Japan’s economy grew 1.1%, underperforming the expected 1.67%.
- Private consumption (what people buy) stayed flat, and capital spending by companies fell by 1.2%.
- Net exports contributed positively (+0.5%) to GDP growth, while domestic demand reduced it (-0.2%).
- Rising energy costs and a weak Japanese yen have increased financial pressures on consumers and companies.
- The Bank of Japan raised interest rates to 1% in June, its highest level in over 30 years, aiming to move away from very low borrowing costs.
- Japan’s stock market and other regional markets like South Korea and Hong Kong showed gains following the report.
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