Japan's economy slows amid weak spending
Japan's economic growth slowed in the second quarter of 2026, recording a quarterly increase of 0.3% and an annual growth of 1.1%, both below the expected 2%. The growth was supported by a 0.5% rise in exports, while private consumption declined by 0.02%, marking the first decrease after eight consecutive quarters, due to rising tobacco prices and the implementation of free education, which led to reduced spending. Corporate investment also fell by 1.2%, affected by supply chain disruptions stemming from the war in the Middle East, while external exports—particularly cars and semiconductor networks—boosted overall foreign trade. The Bank of Japan raised the interest rate to 1% in June, with expectations of continued monetary tightening to combat inflation driven by rising oil prices and energy costs. Meanwhile, the government lowered its growth forecast for 2026 to 0.9%, citing weakened domestic demand and an anticipated inflation increase to 2.2%.
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