AI Data Insight
Preliminary data for Japan's real GDP in the second quarter of 2026 show that the annual growth rate reached 0.7%, a slight increase from the previous quarter's 0.6%. However, both private consumption and capital expenditure weakened, and the annualized quarterly growth rate closely watched by the market was only 1.1% (significantly lower than the consensus of 2.0%), primarily because the Middle East conflict has driven up import costs and inflation. Although strong exports supported the overall economy, inflation has already exerted pressure on domestic real purchasing power, which may cause the Bank of Japan to be more cautious in its future interest rate hike decisions.