FX.co ★ Japan Q2 GDP Growth Beats Estimates

Japan's GDP increased by 0.3% quarter-on-quarter in the second quarter of 2025. This growth marks an acceleration from the upward revision in the first quarter, surpassing market predictions of 0.1%, according to preliminary data. This represents the fifth consecutive quarter of expansion, with private consumption continuing its upward trend, growing by 0.2%, consistent with the first quarter and exceeding the anticipated 0.1%, despite ongoing cost pressures. Meanwhile, government spending remained steady, showing no change after a 0.5% decline in the previous quarter. Business investment saw a robust increase of 1.3% from 1.0%, outperforming expectations of 0.5%. Additionally, net trade contributed 0.3 percentage points to growth, with exports rising by 2.0% compared to a 0.3% decline previously, while import growth decelerated significantly to 0.6% from 2.9%. Japanese exporters, particularly automakers, managed to offset the effects of U.S. tariffs by reducing prices to maintain domestic production. Although the GDP figures exceeded expectations, analysts warn that the comprehensive impact of U.S. tariffs may only become evident in future economic reports.