Japan's Second Quarter GDP Revised Upward to 1.4 Percent Annualized

Japan's economy expanded at an annualized real rate of 1.4 percent in the April to June quarter, according to government data released Tuesday. This figure is a revision upward from the preliminary estimate of 1.1 percent. On a quarterly basis, the real gross domestic product grew 0.4 percent from the previous quarter, which was an increase from the preliminary reading of 0.3 percent.

The upward revision was primarily driven by a narrower decline in business investment. Capital spending fell 0.9 percent in the three months through June, which is an improvement over the previously reported 1.2 percent decrease. Private consumption edged up 0.01 percent, marking six straight quarters of growth, though it was noted to lack momentum. Other data showed government consumption expanded 1.7 percent, while housing investment and public investment were both revised downward.

Trade figures showed exports rose 0.4 percent from the previous quarter, a slight decrease from the preliminary 0.5 percent increase. Imports were revised to a 1.7 percent decrease from a 1.5 percent decline. Nominal GDP expanded at an annualized rate of 5.5 percent, up from the earlier report of 4.8 percent.

Center leaning sources suggest that this growth, combined with strong wage growth, supports the Bank of Japan in considering an interest rate hike. One economist cited by a center source described the current domestic weakness as a temporary lull and expects a moderate growth trend to continue. A center leaning source also noted that policymakers are monitoring the impact of Middle East tensions, exchange rate fluctuations, and AI demand.