Japan posts 1.1% annualized growth in Q2 despite weak consumer spending and export slowdown

According to the Cabinet Office, Japan’s real GDP grew 0.3% quarter-on-quarter in the April-June period, equating to a 1.1% annualized expansion, down from 2.1% in the previous quarter. Household spending declined 1.2% and export growth slowed to 0.5%, though demand for automobiles and AI-related chips helped sustain overseas sales. Government consumption rose 1.6%, yet the overall performance fell short of market expectations.

The war in Iran has pushed oil prices higher, straining a nation that imports almost all its fuel, while a depreciating yen benefits exporters like Toyota but raises import costs for consumers. Prime Minister Sanae Takaichi pledged renewed growth efforts amid slipping approval ratings. The Bank of Japan has modestly lifted its growth outlook for the fiscal year to 0.6%.