Japan Q2 GDP Misses Forecasts as Consumption and Investment Stall

Japan Q2 GDP expanded more slowly than expected as weak household spending and declining business investment complicated the Bank of Japan’s assessment of when to raise interest rates.

The economy grew at an annualised rate of 1.1% during the second quarter, down from 1.9% in the previous three months and below economists’ 2% forecast.

Nevertheless, Japan recorded a third consecutive quarter of expansion.

Capital expenditure fell 1.2% from the previous quarter, compared with expectations for a 0.5% increase, as Middle East tensions affected activity and supply chains.

Private consumption was unchanged, missing forecasts for 0.4% growth as persistent inflation discouraged household spending.

The weaker domestic demand figures could increase pressure on Prime Minister Sanae Takaichi, whose government has capped utility costs and plans to cut the food sales tax to 1% for two years from April.