Japan GDP Revision Offers Relief as Interest Rate Hike Looms

The Japanese economy has shown stronger growth than initially estimated in the second quarter of this year. The revised data released by the Cabinet Office shows that GDP expanded 0.4% between April and June, exceeding the initial estimate of 0.3%. This comes as a relief to analysts who had suggested that the initial reading could hinder the Bank of Japan's efforts to raise interest rates in response to inflation and a weak yen.

Despite some caution regarding private consumption and corporate investment, which remained weak but improved slightly from preliminary data, the revision was largely driven by lower imports. This has lifted concerns about the economy's resilience in the face of rising oil costs and Takaichi's spending plans.

The Bank of Japan is set to hike its key interest rate next week, while Prime Minister Sanae Takaichi reportedly plans a cabinet reshuffle. However, major changes are not expected. The yen has been boosted this month by discussions of rate hikes, reaching its highest level this year.