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

The 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 the first quarter. The quarter-on-quarter growth rate for April to June was estimated at 0.5%.

Private consumption, which constitutes over half of Japan's GDP, is expected to have increased by 0.5%. Net external demand (exports minus imports) probably contributed 0.3 percentage points to GDP growth, maintaining the same contribution as the previous quarter.

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. These factors helped offset the impact of the ongoing U.S.-Israeli conflict with Iran, which has pushed up raw material prices and disrupted supply chains.

Junpei Fujita, a senior analyst at Mitsubishi UFJ Research and Consulting, noted that external demand's contribution was significantly positive, reflecting a temporary rise in service exports and a decline in imports, mainly mineral fuels. However, he cautioned that the prolonged confrontation between the United States and Iran remains a concern for the future.

Economic growth figures will be among the considerations for the Bank of Japan when deciding on potential interest rate adjustments as early as September 2026.

Sources