Japan\u2019s economy grew at a faster clip in the second quarter than initially estimated, strengthening the case for a widely expected Bank of Japan interest-rate hike next week.<\/p>\n
Gross domestic product expanded 1.4% from the previous quarter on an annualised basis, up from an earlier estimate of 1.1%, according to a report by the Cabinet Office on Tuesday. That result was weaker than the median economist estimate of 1.8%.<\/p>\n
Japan’s Economy Has Expanded for Third Straight Quarter<\/p>\n
Business fixed investment drove the upward revision after the inclusion of new data for the period, falling 0.9% from the previous quarter compared with an initially reported 1.2% decline.<\/p>\n
The figures support the BOJ\u2019s assessment that the economy is developing broadly in line with its outlook, reinforcing the case for raising borrowing costs when the board next sets policy on Sept. 18. Swap contracts heavily point to a move at that time.<\/p>\n
While the lingering conflict in the Middle East weighs on Japan\u2019s energy import-dependent economy, global AI demand has helped cushion the blow. Even with elevated oil and raw material costs, Japan\u2019s corporate profits jumped to the highest level on record last quarter.<\/p>\n
Consumer spending, which accounts for about half of GDP, was flat, unchanged from the preliminary report. Household spending has been squeezed by years of rising living costs, and inflation is expected to pick up again through early next year. Data last week showed that households cut outlays for an eighth straight month in July.<\/p>\n
Consumer spending was partly depressed by technical factors, including the introduction of free school lunches, which shifted some expenditure from household consumption to government spending. Partly as a result, government spending increased 6.9% on an annualised basis, the biggest advance since the second quarter of 2024.The Iran war has complicated the GDP picture. Prime Minister Sanae Takaichi\u2019s government released oil from national stockpiles following the US attack on Iran, resulting in a large negative contribution from public inventories.<\/p>\n