Japan Q2 2026 GDP Grows 1.1% Annually, Slowing from 2.1%
Japan's economy expanded at an annualized rate of 1.1% in the second quarter of 2026, slowing from a revised 1.9% in the previous quarter and below the 2.1% pace seen earlier. Weak domestic demand weighed on growth, while external demand contributed positively. Private residential investment fell 0.5% and public demand declined 0.8%. The GDP deflator rose 2.6% year on year, indicating persistent price pressures.
Japan's economy grew at an annualized rate of 1.1% in the second quarter of 2026, slowing from the previous quarter's 2.1% pace, as domestic demand remained weak.
Economists had forecast a quarter-on-quarter expansion of 0.5%, or an annualized 2.0%. The latest reading marked a slowdown from the first quarter's revised 1.9% growth, though it still represented a third consecutive quarter of expansion.
Private residential investment fell 0.5%, while public demand, including government consumption and public investment, declined 0.8%. Exports of goods and services rose 0.5% quarter on quarter, while imports fell 1.5%. Domestic demand subtracted 0.2 percentage points from GDP growth, while external demand contributed 0.5 percentage points.
Tensions in the Middle East and disruptions to traffic through the Strait of Hormuz pushed up prices of fuel and petroleum products, prompting Japan to sharply reduce crude oil imports. Rising raw material costs and supply disruptions weighed on private consumption. On the export side, strong US demand for Japanese hybrid vehicles and continued global investment in artificial intelligence supported exports of semiconductor-related equipment and components. A weak yen also had some impact on export data.
The GDP deflator rose 2.6% year on year in the second quarter, indicating that price pressures remained elevated.