FX.co ★ Japan’s Q1 Capital Expenditure Slips Into Contraction, Signalling Softer Investment Momentum

Japan’s gross domestic product (GDP) capital expenditure turned negative in the first quarter of 2026, underscoring a loss of momentum in corporate investment. According to data updated on 7 June 2026, capital expenditure fell by 0.7% quarter‑on‑quarter, compared with a 0.3% increase in the previous quarter.

The shift from modest expansion to contraction suggests that firms have become more cautious about committing to new investment, as the latest “actual” figure reflects a weaker performance than the “previous” quarter‑on‑quarter change. With the first quarter of 2026 now showing a clear pullback in capital spending, analysts and policymakers will be watching upcoming quarters closely to gauge whether this marks the start of a more prolonged slowdown in Japan’s investment cycle.