Private consumption in Japan disappointed: GDP grew by only 1.1% in the second quarter
Japan's economy expanded by 1.1% in the second quarter, missing the 2% growth forecast. The slowdown was driven by weak private consumption, which declined for the first time in eight quarters.
Japan's economy expanded in the second quarter at an annualized rate of 1.1%, missing forecasts that expected an expansion of 2%, against the backdrop of low private consumption that offset the increase in exports. In the first quarter, the Japanese economy expanded by 2.1%.
The data refers to the three months between April and June, making it the first full quarter that includes the consequences of the war in Iran, which led to a surge in energy prices.
"The economy remains on a path of moderate recovery, with growth in exports compensating for weakness in domestic demand," said Minister of Economy Minoru Kiuchi.
Compared to the first quarter of the year, GDP rose by 0.3%, missing forecasts that expected an increase of 0.5%. Exports were the main engine of growth; however, one of the primary reasons for this is the weak yen, rather than a higher volume of shipments. While exports added 0.5 percentage points to the GDP data, private consumption reduced growth by 0.2 percentage points. This marked the first decline in consumption in eight quarters. Analysts argued that this weakness stemmed from uncertainty regarding supply chain disruptions related to the war in Iran.
Despite the data, the assessment remains that the Central Bank will maintain its plan to raise interest rates. "Growth was positive, but the data that make up the growth were somewhat lower than expected," Kazutaka Maeda, chief economist at the Meiji Yasuda Research Institute, told Reuters. "But considering that the disappointing results were likely caused by temporary factors, I do not think the data point to weakness ahead or will affect the timing of the next interest rate hike," he said.
Thailand also released its second-quarter data, which indicated a sharp slowdown in growth against the backdrop of high energy prices, which offset the increase in investments. GDP for the three months in question rose by 1.9% compared to a year earlier, compared to a growth of 2.8% recorded in the first quarter. Unlike Thailand and Japan, Vietnam reported an expansion of 8.4% in the second quarter, partly thanks to its contribution to AI supply chains.
