Japan's economy is projected to have expanded for a third straight quarter in April-June 2026, supported by solid domestic demand and a decline in imports, according to a Reuters poll reported by CNA Latest News on August 7, 2026.

Gross domestic product (GDP) in real terms is likely to have grown at an annualised rate of 2.0% in the second quarter, following a 1.8% expansion in January-March. The quarter-on-quarter growth rate for April-June was estimated at 0.5%.

Private consumption, which accounts for more than half of Japan's GDP, is expected to have increased by 0.5%. Analysts attribute the firm private consumption and capital investment to government measures aimed at easing cost-of-living pressures and progress in securing alternative energy supplies.

Junpei Fujita, a senior analyst at Mitsubishi UFJ Research and Consulting, noted that external demand contributed positively to growth, reflecting a temporary rise in service exports and a decline in imports, mainly mineral fuels. Net external demand (exports minus imports) likely added 0.3 percentage points to GDP growth, consistent with the previous quarter.

However, Fujita and other analysts expressed concern over the prolonged confrontation between the United States and Iran, which has pushed up raw material prices and disrupted supply chains, posing risks to Japan's economic outlook.

The Bank of Japan is expected to consider these growth figures among other factors when deciding whether to raise interest rates as soon as September 2026.

Sources

Notable Quote

"Overall, the figures are likely to confirm that the economy continued to recover gradually. However, the prolonged confrontation between the United States and Iran remains a source of concern going forward," said Junpei Fujita.