Japan's GDP growth of 1.1% on an annualized basis for the second quarter is below the expected 2%, indicating a slowdown in economic momentum. The previous quarter's growth was recorded at 2.1%.
Exports were the key contributor to this growth, with shipments exceeding expectations for all three months of the quarter, although this was largely influenced by a weaker yen rather than an increase in shipment volumes. The Bank of Japan has slightly adjusted its GDP growth forecast for the fiscal year ending March 2027, raising it from 0.5% to 0.6%.
The central bank noted that while Japan's economy is expected to grow moderately, high crude oil prices due to the ongoing conflict in the Middle East pose a risk. However, government measures to mitigate high oil prices for households and a rise in global demand for AI-related products may provide some support.
Many Japanese firms are integrated into the semiconductor supply chain, which could benefit from this increased demand