Japan’s economy posted stronger-than-anticipated growth in the second quarter, expanding by an annualized rate of 1.0%, according to official figures released on Friday. This outcome surpassed analysts’ projections of a 0.4% increase in Reuters poll.
The results come as firm business spending and robust export activity helped cushion the impact from external economic concerns. Private consumption, accounting for more than half of Japan’s output, edged up by 0.2%—doubling market expectations and maintaining the same growth momentum seen earlier this year. Capital expenditure marked an even sharper uptick, climbing 1.3% versus consensus forecasts of a 0.5% rise. Meanwhile, trade provided a noticeable boost, with net exports contributing 0.3 percentage points to GDP, a turnaround from the drag seen in the first quarter.
However, economists caution that economic uncertainty—especially stemming from U.S. trade policy—could surface more sharply in later economic releases, potentially dampening further advancement.
Japanese automakers have managed to sidestep the full impact of U.S. tariffs by reducing their prices abroad, ensuring that production lines at home remain active. This strategy, however, may not insulate the wider economy indefinitely if trade headwinds intensify.
