Japan’s economic expansion decelerated during the second quarter, falling short of analyst expectations. Official government data showed the nation’s gross domestic product increased by just 0.3 percent compared to the previous three-month period, representing a slowdown from the first quarter’s 0.5 percent growth rate. When calculated on an annualised basis, the world’s fourth-largest economy expanded 1.1 percent, significantly underperforming the 1.67 percent projection that economists had anticipated.
Weakness in domestic spending drove the disappointing results. Consumer expenditures remained essentially flat in inflation-adjusted terms, while business capital investments declined 1.2 percent during the quarter. These declines in internal demand were only partially offset by robust export performance, with international sales contributing positively to overall growth figures.
Rising energy expenses pose significant challenges for Japan’s economic outlook. As a nation heavily dependent on imported crude oil, elevated global energy prices strain household budgets and corporate finances. The weakness of the Japanese yen, which recently touched a 40-year low against the US dollar, has further intensified cost pressures on consumers and businesses alike.
The softer-than-expected growth figures complicate upcoming monetary policy decisions. Japan’s central bank recently raised its benchmark interest rate to 1 percent and faces another policy meeting scheduled for mid-September. Economic analysts warn that sluggish global conditions outside the artificial intelligence sector may continue limiting expansion throughout the remainder of 2026.
Originally reported by Aljazeera →
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