Japanese Economic Growth Misses Forecasts in Second Quarter 2026

Japan's economy expanded at an annualized 1.1% in Q2 2026, falling short of the 2.0% market expectation. This unexpected slowdown was driven by flat private consumption and a decline in capital spending, potentially influenced by Middle East conflict uncertainties impacting supply chains. The weaker-than-anticipated growth complicates future Bank of Japan policy decisions and led to a strengthening of the Japanese Yen.