Key facts
- Japan's economy grew at an annualized rate of 1.1% in the April-June quarter.
- This growth rate missed market forecasts.
- Private consumption was flat, and capital spending declined.
- Exports grew 0.5%, driven by demand for Japanese autos and semiconductors.
- Government consumption rose 1.6%.
Japan's economy grew at an annualized rate of 1.1% in the April-June quarter, falling short of market forecasts and marking the third consecutive quarter of expansion. The quarterly GDP growth was 0.3%.
Private spending dipped 1.2% in the second quarter compared to the previous one, while exports grew 0.5%, supported by global demand for Japanese autos and semiconductors, as well as interest in AI. Government consumption rose 1.6%.
The economy has been impacted by the war in Iran, which has driven up energy costs for resource-poor Japan. The Strait of Hormuz, a key oil transport route, has been effectively blocked, pushing prices higher.
A weak yen has boosted the value of overseas earnings for Japanese companies like Toyota and Honda, but it also makes imports more expensive, raising prices for consumers and denting spending. Concerns about rising prices are growing amid stagnant wage growth.
The U.S. dollar has been trading near 160 Japanese yen, up from about 145 yen a year ago. The Bank of Japan recently raised its economic growth outlook for the fiscal year to 0.6% from 0.5%.