Japan Economy Beats Estimates as BOJ Rate Hike Looms

Japan's economy performed better than initially estimated in the April-June quarter, expanding at an annualized rate of 1.4% compared to initial estimates of 1.1%. The revised data, released by the Cabinet Office on Tuesday, also showed that GDP grew 0.4% without annualization, matching the median forecast and above the preliminary reading of a 0.3% rise.

Kento Minami, senior economist at Daiwa Securities, noted that the economy's resilience in the face of global pressures is notable, with growth remaining around this level despite the Middle East situation. This development has led to increased confidence that the Bank of Japan can proceed with rate hikes without worrying about the economy.

The upward revision reflects improved capital spending data released last week, showing Japanese firms increased plant and equipment spending by 1.6% in the second quarter from a year earlier. Additionally, real wages rose 2.4% in July from a year earlier, marking the biggest increase since May 2021.